Taste Holdings reported a 15 percent increase in headline earnings to R18.2 million in the year to February as demand picked up in the second half, a trend which has continued in the current financial year.
Taste chief executive Carlo Gonzaga said yesterday: “We are reasonably satisfied with the results, especially as we had quite a tough time in the first half.”
He added that current positive sales trends in all brands indicated that the gap between inflation and the recent average salary increase of about 7 percent combined with two years of lower interest rates had finally created some headroom for cash-strapped consumers.
On Monday, far larger competitor Famous Brands – which owns 14 brands including Wimpy, Steers and Debonairs – reported a 19 percent increase in headline earnings to R230.5m in the year to February. Famous Brands has 1 861 outlets.
Taste has a portfolio of mostly franchised restaurant and retail brands in over 320 locations. This includes Scooters Pizza, Maxi’s, the recently acquired St Elmo’s Woodfired Pizza in the food division and jewellery operation NWJ.
During the year, NWJ moved from number four in the market by size to third, and the food division added the 23-year old St Elmo’s brand. Organic growth combined with the acquisition lifted revenue 17 percent to R233.7m.
Group system-wide sales rose 11 percent to R752m, despite the continued financial pressure on consumers.
The acquisition and the development of a sauce and spice mixing capability contributed towards the vertical integration and growth strategies in the food division.
Gonzaga expected the food services division to be wholly producing the sauce and spice requirements for the three food brands, as well as all the pizza toppings by August.
Distribution is currently outsourced, but over the next two years the company will develop its own warehouse and distribution capability.
The food division ended the year with 242 outlets and a 14 percent increase in system-wide sales to R506m.
Taste does not disclose like-for-like sales in its food division, but it said that same-store sales were modest in the first half of the year and accelerated in the second half.
This was particularly the case in the pizza division, with same-store sales rising 7.8 percent in the second half, a trend that has continued into the current financial year.
In the jewellery division system-wide sales rose 4.5 percent to R243m, but same-store sales declined 2.6 percent.
The company said spending patterns on jewellery were unpredictable, but one noticeable trend was increased demand for silver as consumers looked for value. Silver carries higher gross margins and increased transactions at store level, thereby increasing the units manufactured and distributed by the jewellery division’s franchise and wholesale units.
The company piloted Maxi’s and Scooters combination stores on petroleum forecourts with an initial positive outcome. Scooters also opened its first non-delivery outlet in a shopping mall, a pilot which will continue this year.
But a pilot jewellery concession opened in Makro offered limited benefits and was discontinued.
Taste shares advanced by 27.27 percent to close at 70c yesterday, compared with a 0.26 percent rise in the AltX. - Business Report