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Johannesburg - Famous Brands [JSE:FBR] is planning further UK expansion as the South African owner of fast-food chains including Debonairs Pizza and Steers seeks faster growth in the country and increased revenue from currencies other than the rand.
"I have spent a lot of time going back and forth looking for a suitable asset so we can get some momentum in the UK," strategic adviser and former CEO Kevin Hedderwick said in phone interview on Monday.
The Johannesburg-based restaurant owner has just completed its best-ever year in the UK, yet the business is still "pedestrian" by company standards, he said.
Revenue in the UK gained 13% to R116m in the year to end February, yet fell by 2% in pounds, Famous Brands said in an earlier statement. Total sales were up 31% to R4.3bn, while operating profit gained 18%.
The company plans to add five more Wimpy outlets in the country this year and one Steers restaurant as part of a wider store-opening plan across international and domestic markets.
South African retailers have been expanding in the UK and elsewhere in part to diversify away from the rand, which has weakened almost 30% against the US dollar in the past 12 months.
Clothing chain The Foschini Group [JSE:TFG] has bought two British chains since early 2015, while investment company Brait [JSE:BAT] acquired fashion retailer New Look.
Middle East slow
Famous Brands is targeting operating profit of R1bn in the year through February 2018, Hedderwick said, up from R792m in 2016. The company is planning 292 new franchise restaurants this fiscal year, building on an end-Feb total of more than 2 600.
The company is reviewing its licensing agreement in the Middle East as growth in the region has been "a little bit slow," Hedderwick said.
Famous Brands shares gained 2.1% to R119.50 as of 1:29 p.m. in Johannesburg, valuing the company at R11.9bn. The stock is down 8% this year, compared with a 7.1% increase on the FTSE/JSE Africa All Share Index.
"I can confidently say that the objective is doable and we are well on track," said the ex-CEO, who stepped down from the top role in February to make way for Darren Hele.
