Famous Brands regains mojo, shareholders reap rewards

FAMOUS Brands, which holds brands such as Debonairs, Milky Way, Mugg & Bean and Wimpy hiked its annual dividend by more than 80%, saying this year it had achieved a recovery in revenue and improved its cash generation from operations, despite ongoing load shedding strain.

Its shares closed 2.88% higher at R64.30 on the JSE yesterday following the announcement.

In its results for the year ended February 28, 2023, the group said its dividends per share rose by 82% to 363 cents. Its revenue increased 15% to R7.4 billion – materially higher than pre-pandemic levels.

Operating profit was up 37% to R861 million. Headline earnings per share increased by 37% to 488c.

Famous Brands CEO Darren Hele said a constrained consumer and a competitive environment meant the group must compete even harder for a share of the wallet.

“The strain of ongoing load shedding had an impact across all our divisions. The lifting of Covid-19 trading restrictions in June 2022 supported a recovery in consumer spending on restaurants, travel and entertainment.

“Foot counts and dwell times in shopping centres improved, positively impacting restaurants in these locations. South Africa welcomed more tourists, although this still lags below pre-pandemic levels,” he said.

Hele said the local and global inflation picture remained elevated, and South Africa had country-specific challenges, including persistent load shedding, weak economic growth, and high unemployment.

Famous Brands said with many consumers working in hybrid and remote jobs, mealtimes had become more flexible and spread across the day.

“Evening sit-down trade has not recovered to pre-pandemic levels and consumers tend to make earlier bookings,” it said.

While the lifting of Covid-19 restrictions boosted restaurant activity, local trading conditions remained challenging, the group said.

“All brands had to manage menu price increases carefully to balance protecting franchise partner profitability while offering value to consumers in an increased inflationary environment. This required careful price management and robust negotiations with suppliers,” it said.