Revenue for Steers and Wimpy owner falls by 48% due to virus, lockdowns

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The financial impact of the coronavirus pandemic and its related lockdowns has been "extremely severe" on the businesses falling under Famous Brands - the JSE-listed owner of Steers, Wimpy, Mythos and House of Coffees. 

The food services franchisor, in a trading update for the six months ended August 31, said that revenue fell to R2.01 billion from R3.86 billion over the same period last year. The group's operating loss before non-operational items came to R109.8 million, down from a profit of R376.2 million in 2019.

Furthermore, a headline loss per share was recorded at 240 cents per share compared to headline earnings per share of 140cps in 2019. No dividend was declared for the interim period.  

The group's portfolio consists of 23 restaurant brands, represented by 2 838 restaurants across South Africa, Africa, the Middle East and the UK. 

In its trading update Famous Brands said that, in general, the most acute impact was felt at restaurants situated on transit routes, in major malls and those reliant on tourist trade. Eateries in local convenience sites and restaurants in neighbourhood shopping centres, by contrast, fared better. Quick service restaurants benefitted in the period during which delivery and take-away only trade was permitted.

The group's focus over the past six months was to right-size the business, reduce costs and preserve cash to facilitate balance sheet flexibility. Innovations such as no-contact kerbside collect and bundling and sharing offers were successfully introduced.

Famous Brands said that about 95% of the group's store network has re-opened. At the same time the pandemic has had a negative impact on new store openings, which is a key driver of brand momentum.

"Black Friday in November and the holiday season which follows in December are historically the industry's peak trading period, however, it is difficult to accurately predict consumer behaviour or spend in the months ahead," it said. 

"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. Continued health and safety concerns and protocols may also curtail traditional festive season pursuits."

The group said it expected constrained consumer discretionary spend and sentiment to continue. 

* Compiled by Carin Smith

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