Grand Parade Investments (GPI) has warned shareholders to expect a major hit on its finances for the six months ended December 2018, due to the costs of disposing of the Dunkin Donuts and Baskin Robbin brands in the country.
In a trading statement issued on Wednesday, GPI said that it expects to report a basic loss per share between 8.52 to 7.94 for the period – down over 300% from the same period in 2017.
“The decrease in the basic earnings per share is due to the impairment of Dunkin’ Donuts and Baskin-Robbins, which was liquidated subsequent to 31 December 2018 and is reported as part of discontinued operations,” it said.
Continuing operation will contribute basic earnings per share of between 7.69 to 9.09 cents, but this is pushed into the red by the Dunkin impairment, which will contribute a loss per share of between 16.22 and 17.03.
The group still expects headline earnings to be 3.43 to 4.07 cents per share (up between 7.2% and 27.2%) thanks to the contribution from continuing operations (7.81 to 9.26 cents per share). Discontinued operations are expected to contribute a loss per share of between 5.19 to 4.38 cents per share.
GPI announced in February that it would be closing down the two brands in South Africa, after it was unable to find a buyer for it.
“The decision to exit Dunkin Donuts and Baskin Robbins was made following sustained losses in these businesses and an unsuccessful process to dispose of these businesses,” it said.
“The decision is in line with the company’s value-based strategy, which aims at improving the groups capital allocation by channelling capital to high-value potential assets, such as Burger King.”
The brands have been in South Africa for little over two years, after GPI launched them in country at the end of 2016.
In January 2016 Grand Foods acquired the South African master franchise licences for Dunkin’ Donuts and Baskin-Robbins, from the Dunkin’ Brands group.
According to the Dunkin’ Brands group, under the agreement, Grand Parade was to develop more than 250 Dunkin’ Donuts restaurants and more than 70 Baskin-Robbins shops in South Africa time, with an initial focus on Cape Town and Johannesburg.
However, the brands never exited the Mother City, and rollouts slumped in 2018.
As of February 2019, there were only 11 Dunkin Donuts stores in the country – all in Cape Town and surrounds – while only 5 Basking Robbins outlets opened, all in the same city.