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Famous Brands takes knock on profit warning

May 17 2018 11:03
Lameez Omarjee

The Famous Brands [JSE:FBR] share price took a knock in early trade on Thursday after the owner of Steers and Debonairs said it expects a weaker financial performance for the year to end-February.

In a note to shareholders the group said headline earnings per share are expected to be within a range of 327c and 405c, lower than the 428c reported in 2017. This is an “approximate decrease” of 5% to 24%.

Basic earnings per share are expected to decrease within a range of 18c and 23c per share, compared to 414c reported in 2017. This is an approximate decrease of 94% and 96%.

The share price reacted negatively, trading down 4.52% at R101.69 by 10:25 on the JSE.

The group’s South African business is expected to report an improvement in profit before interest and tax, compared to the previous period. However the adverse macro-economic environment in the UK would affect the results of its UK investments, the group warned.

Famous Brands bought UK’s Gourmet Burger Kitchen ahead of the Brexit vote. Gourmet Burger Kitchen (GBK) reported an operating loss of £7.8m (R131.4m).

“The board of directors remains confident that the interventions being implemented in the business will ensure that  GBK returns to profitability in the medium term,” the group said.

Overall the group’s weaker performance is due to an impairment of tangible assets at group level amounting to R304m, an impairment of property, plant and equipment at GBK amounting to £4.2m (R69m) and a provision of property related expenses of £2m (R33m) also have a bearing on results.

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steers  |  debonairs  |  famous brands  |  shares  |  investment
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