Famous Foods takes R874m impairment

Reuters

South African fast-food chain owner Famous Brands, which owns Wimpy, Steers and Debonairs Pizza, said yesterday it will take a pre-tax impairment charge of R874 million ($60 million), sending its shares down 7%.

The company blamed the impairment on the difficult trading conditions and sustained underperformance of its UK Gourmet Burger Kitchen (GBK) business.

For the six-months ended August 31, the company expects GBK to record an operating loss of £2.6 million ($3.42 million) compared to a loss of £872 000 in the corresponding period last year.

Basic headline earnings per share are expected to increase between 175 cents and 194 cents versus 170 cents a year earlier. Basic earnings will however turn into a loss of between 566 cents and 623 cents, the company said.

Famous Brands bought GBK in 2016 but its contribution to group profitability has been hampered by lower consumer spending due to Brexit, higher property rates, increased input costs, declining mall traffic and oversupply of restaurants. The company will announce its results on October 29.