Spur sales hammered by level 5 lockdown
DURBAN - Spur Corporation’s sales took a knock in the year to the end of June after the restaurant franchisor was hit by store closures under level 5 of the lockdown.
The group on Friday reported a 21.7 percent decline in total franchised restaurant sales to R6 billion as the lockdown adversely impacted trading in the last four months of the financial year. Sales from franchised restaurants in South Africa decreased by 22.3 percent, and sales from international restaurants fell by 16.7 percent in rand terms.
In the first eight months to February, restaurant sales were up 6 percent in South Africa, while sales were up 4 percent in international operations.
The group said all restaurants in South Africa were closed from the start of the lockdown on March 27 until May 1, and the group did not earn any material income during that period. Spur’s revenue declined by 19.4 percent to R761.6 million, and headline earnings fell by 56.1 percent to R72.5m.
Revenue from the South African operations, which account for 95.7 percent of total group revenue, decreased by 19.3 percent, while international revenue declined by 20.9 percent, mainly due to the weak performance of the Australasian operations.
Its profit declined by 50 percent to R70.66m, while diluted headline earnings per share (Heps) declined by 52.1 percent to 82.96 cents a share.
Chief executive Pierre van Tonder said the group entered lockdown with adequate cash resources and an ungeared balance sheet and did not need to access external funding during lockdown despite the business generating limited revenue. Spur introduced its first virtual brands in June to capitalise on the growing global trend of home consumption, which has been accelerated by Covid-19.
“Our virtual, online, delivery-only brands operate from existing brick and mortar host restaurants. The brands require limited additional investment by franchisees while offering the opportunity to generate incremental turnover,” Van Tonder said.
However, the group had shown a strong recovery in the first four months of the new financial year to October, with improving monthly sales growth trend ahead of the management’s expectations.
Its South African restaurants traded at 92.8 percent of last year’s turnover for October, improving from 36.5 percent for July, 56.7 percent for August and 73.8 percent for September. International restaurants traded at 97.5 percent of the prior year in October. The group has 631 restaurants, and 612 had reopened by the end of October.
Spur is planning to open 21 restaurants in South Africa in the year ahead, mainly under the Spur, Panarottis and RocoMamas brands, and eight new international restaurants.
Van Tonder said the restaurant industry faced a protracted period of recovery following the devastating impact of Covid-19 on consumers and restaurant owners.
“We expect the current weak trading environment to continue in the medium term. Trading could be further impacted by widespread job losses as well as a second wave of Covid-19 infections, similar to what is being experienced in several other countries,” he said.
Spur’s shares closed unchanged at R17.80 on Friday.