Brian Joffe’s investment firm eyes ‘gin and tonic summer months’

Long4Life, the investment group started by Bidvest founder Brian Joffe, on Monday (14 October), said it delivered a reasonable performance for the six months ended August 2019, considering the difficult trading environment.

Long4Life holds a portfolio of assets in the leisure and lifestyle sector including Sorbet and Sportsmans Warehouse. The group also recently acquired a 4.6% stake in JSE-listed Spur Corporation, taking its total share to 14.4%.

It has also invested in a beverages division which performed well in the reporting period, with expectations for strong sales in the coming months, despite constrained consumer spending.

Revenue for the period increased by 20% to R1.84 billion, and the gross profit was higher at R718.9 million, from R627.5 million, at a gross margin of 39.1%.

It said that the trading profit was relatively flat at R176.2 million (Aug 2018: R177.6 million), while operating profit climbed to R183 million, from R163 million.

Headline earnings per share amounted to 15.4 cents, down from 16 cents in 2018.

The group has continued to invest in infrastructure, store development and marketing in order to enhance the competitiveness and sustainability of the businesses, said Joffe, who is chief executive officer.

Working capital is typically absorbed in the first half of the year as the businesses ramp up for the holiday and summer season trading, which impacts operating cash flows at the half year, he said.

The group’s beverages division, which comprises the businesses of Chill Beverages and Inhle Beverages, and the tonic mixer brand, Fitch & Leedes, saw revenue increase by 20% to R657.1 million.

Chill Beverages’ investment in production capacity and plant upgrades together with increased expenditure in marketing and advertising has not yet been matched by increased sales. Therefore, whilst revenue and volumes increased against the prior period, underutilised capacity together with the increased expenditure resulted in a decline in the trading profit of the division during this period.

It is pleasing that with the changing season, trading conditions in Chill Beverages have improved significantly and strong sales are expected in the summer ahead.

Inhle Beverages continues to perform well and is currently operating at near full capacity, delivering a solid contribution to the division’s overall profit.

The group’s sport and recreation division, which includes Sportsmans Warehouse, achieved revenue growth of 12.7% to R1.0 billion.

The weighted trading area increased by 3.5% relative to the prior corresponding period. Gross profit margin declined from 49.1% in the previous period to 46.7%, primarily due to accelerated sales of promotional and marked down goods in line with the execution of the strategy of maximising asset management, Long4Life said.

“We anticipate gross margin improvement in the second half of the year. Sales for Sports Retail, principally Sportsmans Warehouse, have been pleasing whilst trading profit was slightly higher than the previous year,” it said.

In the period under review, Sportsmans Warehouse opened one new store at Eastgate Mall, Johannesburg and two OTG stores.

The personal care and wellness division which incorporates the beauty businesses, Sorbet and Lime Light Hair & Beauty, saw revenue jump to R135.6 million, from R56.2 million.

Excluding the acquisitions and new store openings, like-for-like revenue grew by 13.6%, it said.

“Sorbet has traded in line with expectations achieving continued top line growth. Whilst interest from potential franchisees remains strong, assessing and securing suitable sites for franchisees remain a challenge,” said Long4Life

Looking ahead, Long4Life said that the trading environment is expected to remain difficult with constrained consumer spending. “Given the seasonality of the businesses, the divisions traditionally have higher operating leverage in the second half of the year,” it said.

“Key to achieving sustainable growth in the medium term is an improvement in the economy, continued demand for the group’s brands and services, while executing efficiently,” it said.


Read: Veldskoen and Sorbet investor Brian Joffe scores big payday

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Brian Joffe’s investment firm eyes ‘gin and tonic summer months’