Famous Brands, the owner of Steers, Wimpy and Mugg & Bean, expects its headline earnings per share (Heps) to double in its half-year to end-August as customers continued their return to eating out.
Famous Brands also owns a range of higher-end restaurant chains that include Turn ’n Tender, Mythos, Salsa and Lupa Osteria, which would have also done better this year after Covid-19 restrictions ended. Alcohol bans and curfews affected sit-down dinner trade in 2021 as consumers avoided a rushed night out.
With earnings up, it is not clear if the consumer crunch and high interest rates are reflected in the numbers to end-August. Investors are likely to keep an eye on how Famous Brands performs over the Christmas period and if constrained customers are forced to cut back over the traditionally busy season when restaurants expect a boost in earnings.
Famous Brands said Heps, a main profit measure in SA, could be 99%-143% higher at between R1.93 and R2.36.
JSE listing rules require companies to inform the market when they are aware earnings will be at least 20% higher or lower than the year before.
Famous Brands’ basic earnings per share will rise 143%-197%, which includes a payment of R75m from the liquidation sale of UK chain Gourmet Burger Kitchen (GBK). The payment is a far cry from the £120m, or R2.1bn, it spent on purchasing the business in 2016.
In late 2020, it sold GBK for £6m to business person Ranjit Singh Boparan, owner of a British group of restaurants and known as the “Chicken King”. The sale resulted in 35 restaurants being saved while 27 were closed.
Famous Brands bought the upmarket burger chain about three months after the UK voted to leave the EU in a shock outcome that dented consumer confidence. GBK struggled from the get-go and was forced to strike a restructuring deal with landlords in 2018 with more than 20 stores being shut.
Famous Brands is one of many SA businesses that incurred billions of rand in losses overseas as their strategy to diversify from the weakening local economy unravelled.
By the JSE’s close on Monday, Famous Brands’ share price was down 1.19% to R53.16, giving it a market value of R5.33bn.
Update: October 10 2022
This story has been updated with additional information.
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