Famous Brands’ annual earnings to fall up to a third, with UK burger chain a major cause
Famous Brands, which bought the UK’s GBK chain for £120m in 2016, has already written down the value of that business by more than R1bn
Famous Brands, whose portfolio includes Steers, Wimpy and Mugg & Bean, says earnings in the year to end-February fell by up to a third as losses widened at its troubled UK burger chain.
Famous Brands, which bought the UK’s Gourmet Burger Kitchen (GBK) chain for £120m (R2.3bn) in 2016, has already written down the value of that business by more than R1bn.
GBK has been struggling because of lower consumer confidence amid Brexit talks, the rise of online food delivery and intense competition in the premium burger segment.
The disastrous acquisition has weighed heavily on Famous Brands’ shares, which have roughly halved in value since October 2016.
Famous Brands said on Monday that its basic headline earnings per share in the year ended February fell between 16% and 33%.
The group’s South African business would report operating profit before nonoperational items that was "in line with the prior comparable period", it said.
But operating losses before nonoperational items at GBK Restaurants UK would grow to £4.6m from £3.7m.
When including the GBK write-downs announced in 2018, as well as once-off restructuring costs in the UK of R17.2m and an impairment of an associate company, Famous Brands said it would report a basic loss for the year.
The group’s annual results are due on May 29.
Analysts have said it could take years for Famous Brands to fully recover from the disastrous GBK takeover, which has been compared to Woolworths’ overzealous move to buy Australian department store chain David Jones in 2014.