Famous Brands, the owner of brands including Wimpy, Mugg & Bean, Steers, and Debonairs, on Monday (26 October), reported a 48% decline in interim result for the six months ended August 2020, to R2.0 billion.
Citing the impact caused by the Covid-19 pandemic, the group recorded an operating loss before non-operational items of R110 million, down 129%, and a headline loss per share of 240 cents, down 271%.
“During the lockdowns, in line with regulations, our SA and UK operations were entirely shut with the exception of the SA retail division,” Famous Brands said.
“The gradual easing of restrictions in SA and the UK in the second half of the review period enabled us to re-open parts of the business in compliance with regulations, however, significant components remained in hibernation until July,” it said.
Approximately 95% of the Famous Brands’ store network has re-opened, with a small balance temporarily closed, it said. “More significant, is the negative impact the pandemic has had on new store openings, which is a key driver of brand momentum.”
Famous Brands has 23 restaurant brands, 2,733 franchised, and 111 company-owned restaurants in its portfolio.
The company said that quick service restaurants outperformed casual dining restaurants, because they served take-aways, while it invested in technological enablers including new apps and improved e-commerce/online competence to enhance the its convenience, collect and delivery positioning.
It also highlighted the expansion of its home delivery capability – both owned and third-party aggregators – in line with evolving customer expectations.
Famous Brands initiated a retrenchment programme “where all other options had been exhausted”.
Black Friday and the festive season
Looking ahead, the company said it expects its trading to peak around Black Friday in November and the holiday season, “but it is tricky to predict how consumers will spend their money in the months ahead because of the pandemic and its economic impact”.
“The school holidays will be both later and shorter than previously, international tourism is likely to be muted, and domestic travel and leisure activities will be constrained by reduced disposable income,” the group said.
“Continued health and safety concerns and protocols may also curtail traditional festive season pursuits.”
The low food inflation during the reporting is expected to rise rapidly in the next six months because of the unstable and short-supply of raw materials. Import duties on key products, including chicken, are expected to exacerbate the situation,” Famous Brands said.
“We remain concerned about the weak state of the economy which, together with the financial and psychological impact of the pandemic, will constrain consumer discretionary spend and sentiment. However, management is cautiously optimistic, barring any further unforeseen events, that the second half of the current financial year will deliver stronger growth than the first half (H1).
“This optimism is based on the very weak base of H1, during which there was one month of no trade and three months of tightly restricted trade. Furthermore, aligned with the phased easing of restrictions, consumer activity has continued to increase, reflected by the upward sales trend over the past three months and particularly post the review period,” it said.