Steers heads for UK
"We've always said we wanted to export Steers at some point. There are a lot of expats living in the UK ... especially in ... Clapham‚" Famous Brands CE Kevin Hedderwick said on Monday.
Famous Brands already operates in the UK through Wimpy.
Like rival Spur Corporation (SUR)‚ it has struggled in the UK market over the past few years as high labour costs and dampened consumer spending weigh on operations.
Equity analyst Daniel Isaacs of 36One Asset Management said: "More recently Spur Corporation has seen a nice turnaround in that space‚ so it shows there is money to be made‚ but it is a difficult environment. It is really economic dependent ... you really have to see a pick up in the economy before you see growth there on a larger scale."
For the year ended February‚ Wimpy UK reported a 9% decrease in revenue sterling and a 1% increase in rand terms to R83m.
"It's a very small part of our business‚ 1.2% of operating profit. We've opened two Wimpy (outlets) in the last couple of months and we want to open a few more this year. For us the UK is looking a bit more optimistic‚" Hedderwick said.
Famous Brands reported a 23% increase in diluted headline earnings per share to 335c for the year ended February.
Revenue grew 17% to R2.52bn while profit before tax rose 15% to R462m.
"It is impressive to show double-digit income growth in this environment‚ but the bottom line was flattered by the decrease in the tax rate. Taking into account that the price is where it is‚ it was pricing in a bit more earnings growth than what actually came through. If you look at the operating income growth over the last few years‚ this is the slowest growth the company has had for a good couple of years‚" said Isaacs. "It is an excellent company‚ with great management and they're operating well. I think it's more due to the environment and also as they get bigger the acquisitions that they make have a far less effect on the numbers‚" he said.
Like other retailers eyeing the fast-growing continent‚ Famous Brands is planning to open about 55 restaurants in Africa this year.
Source: I-Net Bridge
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