Gems leave a bitter taste

The exceptionally tough economic conditions and vanishing disposable income are hitting the consumer right in that most sensitive of areas, the stomach.

Famous Brands announced last week that headline earnings were likely to drop by a little more than half compared to the prior comparable period, far from helped by a particularly limp performance from its UK burger brand, GBK. However the mood was positively sprightly compared to that at Taste Holdings, which reported that its after-tax losses had nigh-on doubled in the period.

Taste is an unusual company in that it has two divisions that are synergistic only in the way that they offer a one-stop shop to the romantically inclined consumer. The combination of food and jewellery has a long tradition of success in the wooing department, but sadly it doesn’t translate as well into the corporate. Taste says it was expecting a decline in the jewellery division, but was taken aback by its speed and extent.

It was looking to sell the division, but that proved tricky under the considerably adverse circumstances so it’s going to try to fix it instead.

On the food side its upmarket offerings, Starbucks and Dominos performed acceptably, but its brands catering for the lower-income segment took a hammering, and attempts to bump up the value proposition and increase marketing met with limited success. The company’s looking to raise capital to pay down debt and fund future expansion of Starbucks and Dominos, but the market remains mighty tough, and Taste is not expecting any imminent improvement.