Gourmet Burger takes a bite out of Famous Brands profit
Almost R1.3bn wiped off its market cap after the disastrous trading update
Famous Brands had one of its worst day in years on Tuesday, crashing as much as 17% on the JSE — the steepest fall since June 2003, according to Bloomberg — before recovering to close 10.74% lower. Almost R1.3bn was wiped off its market cap after a disastrous trading update revealed the extent to which 2016’s Gourmet Burger Kitchen acquisition — the biggest deal under former CEO Kevin Hedederwick — soured. And analysts have warned that Famous Brands shares could fall further. Imtiaz Suliman, portfolio manager at Sentio Capital, which sold its stake after the company’s earlier profit warning in August, said “if they’re going to come out with R1.70 in earnings for the half-year, it’s still trading on a 20 p:e [price:earnings], so there could be more downside”. Investec Asset Management’s Andrew Joannou agreed. “I don’t think we’ve seen the end of the decline and we’re not buyers, purely because we don’t think it’s cheap enough.” Besides battling a depressed economy in SA — although it...
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