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The financial impact of the coronavirus pandemic and its related lockdowns has been “extremely severe” on companies owned by Famous Brands, the owner of Steers, Wimpy, Mythos and House of Coffees listed on the JSE.
The foodservice franchisor, in a business update for the six months ending Aug. 31, said revenue fell to R2.01 billion from R3.86 billion during the same period last year. The group’s operating loss before non-operating items amounted to R109.8 million, compared to a gain of R376.2 million in 2019.
Additionally, an overall loss per share of 240 cents per share was recorded compared to overall earnings per share of 140 cps in 2019. No dividend was declared for the interim period.
The group’s portfolio consists of 23 restaurant brands, represented by 2,838 restaurants in South Africa, Africa, the Middle East and the United Kingdom.
In its business update, Famous Brands said that, in general, the most acute impact was felt in restaurants located on transit routes, in major shopping centers and those that depend on the tourist trade. In contrast, restaurants at local convenience sites and restaurants at neighborhood shopping centers performed better. Quick-service restaurants benefited from the period during which door-to-door and take-out trading were allowed.
The group’s focus for the past six months has been to adjust the size of the business, reduce costs and preserve cash to facilitate balance sheet flexibility. Innovations such as contactless curbside pickup and bundling and swapping offerings were successfully introduced.
Famous Brands said that about 95% of the group’s store network has reopened. At the same time, the pandemic has had a negative impact on new store openings, which is a key factor in driving the brand.
“Black Friday in November and the holiday season that follows in December are historically the industry’s peak business period, yet it is difficult to accurately predict consumer behavior or spending in the coming months,” he said.
“School holidays will be later and shorter than before, international tourism is likely to be muted, and domestic travel and leisure activities will be constrained by reduced disposable income. Continued health and safety concerns and protocols. security can also reduce traditional activities during the holiday season. “
The group said it expected restricted consumer discretionary spending and confidence to continue.
* Compiled by Carin Smith
