Starbucks operator Taste reports more losses stemming from ‘poor decision-making’
But Taste says ‘financial discipline has been restored’ and it is now poised to grow sales and ‘realise attractive margins’
Taste Holdings, which operates the Domino’s Pizza and Starbucks brands in SA, says total losses rose by about a third to R318.4m in the year to end-February.
The troubled group, which is under new management, says its woes stem from poor decision-making in the past — including a strategy that saw it take on more ventures than it could handle at one time. The company’s shares were last traded at 9c, from a high of R4.43 in July 2015.
But Taste said on Friday "financial discipline has been restored" and it was now poised to grow sales and "realise attractive margins".
Revenue dipped below the R1bn mark in the year to end-February, falling 7% to R959.5m. Sales from the luxury goods business, which houses the NWJ and Arthur Kaplan brands, fell 12% while food sales edged 1% lower.
The company recorded impairments and once-off restructuring costs of R102m.
At the end of the period, it had cash and cash equivalents of R148.9m, up from R116.4m. The group said it no longer had long-term debt on its balance sheet after using an equity raise to pay off loans in 2018.
"The executive team have a board-approved business plan that envisages a turnaround and resumed growth aligned to realistic milestones set for this year-end and through the next decade," it said.
In the new financial year, the Starbucks business would focus on expanding its corporate store network "on a revised capex model and achieving the required return on investment for each new store".
Domino’s would focus on getting its existing store network to break-even on an earnings before interest, taxes, depreciation and amortisation (ebitda) basis.
"Domino’s will then expand its corporate store network within a capex model calculated to achieve the required investment returns."
The group as a whole “will focus on ensuring that its retail store operations generate an ebitda profit for the year”.
The company would also talk to “various capital markets” to secure more funding.