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Long4Life struggling to secure 'suitable' shops for Sorbet

Oct 14 2019 12:52

Long4Life [JSE: L4L], which owns Sorbet and Sportmans Warehouse, saw its headline earnings fall from R912m to R875m in the six months to end-August.

The investment group, headed by Bidvest founder Brian Joffe, says its performance was “reasonable” considering the difficult trading environment. “Key to achieving sustainable growth in the medium term is an improvement in the economy, continued demand for the group’s brands and services, while executing efficiently.” By midday, its share price was up 3.5% to 414c.

Across the group, revenue increased by 20% to R1.84bn. Long4Life’s investments in infrastructure and  store development impacted both margins and returns in the short term, it said.

Its sport and recreation division – which includes Sportsmans Warehouse and Outdoor Warehouse – saw its revenue increase by almost 13% to R1bn. Product prices at these stores rose by 1.1% - almost double the price inflation in the previous year (0.6%) - but its profit margin was lower due to promotions and sales.

Long4Life says Sorbet traded in line with expectations, but while interest from potential franchisees remains strong, “assessing and securing suitable sites for franchisees remain a challenge”.

Its beverage division (Chill Beverages and Inhle Beverages), which produces its own brands and private label products, saw revenue increased by 20% to R657m.

Over recent months, Long4Life increased its stake in Spur to 14.4%, and it also spent more than R109.1m on buying back its own shares. Long4Life is considering acquisitions “in a diligent and cautious manner”.

No dividend was declared.


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