Spur flags a likely drop in its half-year earnings
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DURBAN - SPUR CORPORATION yesterday warned its shareholders that its half-year earnings were likely to decline as much as 77 percent as trading restrictions and lockdown continued to hit the business.
The lockdown since last year, compounded by the second wave of the Covid-19 pandemic and the implementation of the revised level 3 restrictions in the key trading month of December, curtailed franchised restaurant sales in the period.
“As expected, these restrictions, combined with weaker consumer disposable income, were the main contributors to the decline in total franchised restaurant sales,” the group said. Spur’s franchised restaurant sales declined 29.4 percent to R2.9 billion during the period.
As a result, Spur expected its headline earnings per share to decline by between 72 percent and 77 percent for the six months to the end of December to between 28.9 cents and 35.2c a share, down from 125.8c reported a year earlier. Its earnings per share (Eps) were expected to decline by between 72 percent and 77 percent, to between 29c and 35.3c, compared with last year’s 125.9c.
“Earnings for the period were further impacted by costs related to a voluntary retrenchment programme undertaken during the period as part of the group’s austerity measures in response to Covid-19. A charge against earnings was recorded in the current reporting period to recognise the present value of once-off employee benefit liabilities. These combined costs totalled R11.8 million,” the group said.
Spur was further impacted by temporary fee reductions granted to franchisee partners for both franchise fees and marketing fees during the year.
“The concessions were implemented to assist the franchisee base through the difficult trading periods from the start of the lockdown in March 2020. The concessions are reviewed monthly by the executive team and have gradually been revised as trading conditions have improved and hard lockdown restrictions eased,” the group said. Spur has seen a monthon-month recovery in its restaurant sales post-lockdown and recovery was reported across the group’s brands.
Spur consists of brands such as The Hussar Grill, Spur Steak Ranches, RocoMamas and Pizza and Pasta.
“Furthermore, trading has improved in February since the easing of level 3 trading restrictions announced on February 2, 2021. The improving trading environment is encouraging for both the company and its franchisee partners. The group’s balance sheet remains ungeared,” the group said.
Spur shares closed 1.42 percent higher at R17.80 on the JSE yesterday.