Economic slowdown hits Chesanyama-owner Gold Brands
Gold Brands Investments says the 2017 financial year will be remembered as one in which companies with exposure to the consumer goods sector suffered significant headwinds.
The franchisor said that in the year to February 2017, it had been forced to close more than half of its flagship head office Chesanyama stores, from 13 in February 2016, to five in the period under review.
"Due to the economy and consumers reducing their spending, the group went through significant change and transformation," said CEO Praxia Nathanael.
"Management have introduced a number of strategic interventions to improve the revenue, profitability and liquidity position of the group."
Gold Brands incurred a net loss for the year of R48m, with current liabilities exceeding current assets by R17m at year end.
It said strategic interventions ahead included the introduction of an online ordering platform and outsourcing the food distribution function; in-house production of sauces and spices; changing pay and sourcing structures with franchisees and retrenching excess staff.
Gold Brands reported turnover of R143m, from R235m in the year-earlier period, because of a general decrease in the economy, which management estimates to have been responsible for at least a 15% decrease. More than 155 underperforming franchisees closed and the opening of new franchises was halted.
The company said talks were still in progress to take the Chesanyama brand to the UK.