Famous Brands sees $60 mln impairment as UK burger business struggles
JOHANNESBURG, Oct 15 (Reuters) - South African fast-food
chain owner Famous Brands, which owns Wimpy, Steers and
Debonairs pizza said on Monday it will take a pre-tax impairment
charge of 874 million rand ($60 million), sending its shares
down 7 percent.
The company blamed the impairment on the difficult trading
conditions and sustained underperformance of its UK Gourmet
Burger Kitchen (GBK) business.
For the six-months ended August 31, the company expects GBK
to record an operating loss of 2.6 million pounds ($3.42
million) compared to a loss of 872,000 pounds in the
corresponding period last year.
The company said basic headline earnings per share -- which
strips out certain one-off items and is the most widely watched
profit gauge in South Africa -- are expected to increase between
175 cents and 194 cents versus 170 cents a year earlier.
Basic earnings will however turn into a loss of between 566
cents and 623 cents, the company said.
Famous Brand bought Britain's GBK in 2016 but its
contribution to group profitability has taken longer than the
company initially anticipated, hampered by lower consumer
spending in the context of Brexit as disposable incomes come
At the same time, higher property rates in Britain and
increased input costs, declining foot traffic in malls,
exacerbated by the oversupply of restaurants as landlords
continue to replace failing retailers with more food offerings
has contributed to GBK's estimated larger operating loss.
At 1023 GMT, shares in Famous Brands were down 4.41 percent
to 97.50 rand after having weakened 7.2 percent, its lowest
since September 21.
The company will announce its results on Oct. 29.
($1 = 14.4594 rand)
($1 = 0.7610 pounds)
(Reporting by Nqobile Dludla
Editing by James Macharia)
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