De­cline in con­sumer spend weighs on Taste Hold­ings

The Herald (South Africa) - - BUSINESS - Robert Laing

SALES growth of 6% from Taste Hold­ings’ fast food out­lets failed to off­set a 15% drop in sales from its jewellery stores, drag­ging the group’s in­terim rev­enue down 9% to R483-mil­lion.

Taste said in its re­sults for the six months to end Au­gust, re­leased yes­ter­day, that af­ter “in­ter-seg­ment elim­i­na­tions” had been ac­counted for, its food di­vi­sion’s rev­enue de­clined by 1%.

“Any op­er­a­tional gains made dur­ing the six months have been over­shad­owed by the bru­tal and sus­tained de­cline in con­sumer spend­ing across al­most all cat­e­gories that the group trades in,” chief ex­ec­u­tive Carlo Gon­zaga said.

Be­fore in­ter-seg­ment elim­i­na­tions, food rev­enue grew 6% to R282-mil­lion while jewellery sales fell 15% to R253-mil­lion.

The jewellery di­vi­sion swung from a pre­tax profit of R14-mil­lion in the match­ing pe­riod to a loss of R9-mil­lion. The food di­vi­sion’s loss widened to R71-mil­lion from R64-mil­lion.

The group’s over­all af­ter-tax loss nearly dou­bled to R66-mil­lion from R34-mil­lion.

Taste re­cently aban­doned plans to sell its jewellery di­vi­sion, whose brands in­clude NWJ, Arthur Ka­plan and World’s Finest Watches.

Taste grew the num­ber of cor­po­rate-owned stores to six Star­bucks and 63 Domino’s, giv­ing a to­tal of 69 – more than dou­ble the prior year’s 34.

“Our ef­forts to im­prove the value propo­si­tion, com­bined with in­creased mar­ket­ing spend­ing, have met with lim­ited suc­cess and cer­tainly have not been enough to counter the cur­rent sales cy­cle,” Gon­zaga said.

Taste Hold­ings shares traded down 4.3% at 89c in early trade on the JSE yes­ter­day. – BDLive

FEEL­ING THE PINCH: Taste Hold­ings has scrapped plans to sell its jewellery di­vi­sion, which in­cludes NWJ

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