Famous Brands expecting to dish up strong results

Despite difficult trading conditions and having to recall ready-to-eat meat products from its retail outlets due to SA's listeriosis outbreak, Famous Brands is expecting year-on-year improvement for the six months ended August 31, 2018.

In a statement issued late on Thursday, Famous Brands – which includes Steers, Wimpy, Debonairs, Fishaways, Milky Lane and Tashas in its portfolio – said it was expecting "stronger" results overall than in the prior comparable period, with a "solid improvement in PBIT (profit before interest and tax)".

Across both leading (mainstream) and signature (niche) brands, system-wide sales increased 6.7%, compared to 7% in 2017; while like-for-like sales grew by 2.8% compared to 1.8% in 2017.

Independently, leading brands’ system-wide sales rose 6.6%, with like-for-like sales up 3.6%.

Signature brands’ system-wide sales increased 7.5%, while like-for-like sales declined by 2.9%, the company said.

Across the Group’s restaurants in SA and the AME region, combined system-wide sales increased by 7.1%, compared to 6.3% in 2017.

British chain Gourmet Burger Kitchen, however, was expecting a larger operating loss.

"Difficult trading conditions persisted across all our markets during the review period, with common features including intensified competitor activity and margin pressure in the context of economic hardship and constrained discretionary spend. 

"Despite this, segments of the South African consumer base showed early indications of optimism and improved confidence in the wake of recent positive developments in government leadership and outlook for the country," the company said.

According to the statement, growth in the local market was driven by the company's leading brands, "underpinned by prudent commitment of resources to entrench their leadership position in their trading categories".

The company also gained momentum from a strategic focus on online, digital and social media capabilities, Famous Brands said.

Growth reported by the signature brands was primarily derived from opening new restaurants and entering new markets.

Shares in the branded food services franchisor dipped to trade at R98.63 a piece at 11:16 on the JSE.