Research archive for TAS

Yesterday we had the 6 month results from Taste. While not a core holding, they do have the master franchise of one of our US core holdings Starbucks. Onto the numbers quickly, revenue is up 9% to R529 million for the period and core headline loss of R23 million or 6c a share.

I heard some fellow call in the wireless yesterday afternoon, bemoaning the fact that Starbucks was coming to South Africa, he was worried what this would do to the fledgling coffee culture that was growing in Johannesburg. Did he think that Starbucks started with 1000 stores? I must say that my choice of words in the car were not PG13 even, sorry. The first Starbucks started 44 years ago, with a single store in Seattle, their experience no matter where in the world is supposed to be the same. Starbucks is awesome. If the coffee being offered by the boutique houses is of a better quality and the experience is fine for men wearing lumberjack shirts, skinny jeans and sporting beards, then fear not, the same patrons will continue to frequent that joint. When Starbucks IPO'ed in 1992, 21 years after being found, there were only 165 stores. Last year that number crossed 20 thousand.

Taste Holdings released their Domino's Pizza update at around half past three yesterday afternoon, the stock price added over four and a half percent. The company has been on a really strong marketing drive, for this brand specifically, I have seen promoted adverts for Domino's on my Twitter feed, Byron pointed them out to us in the office the other day, as well as the "find the next location" radio adverts to get the next location of the global pizza chain. Good for this management team, they work hard, they punch above their weight and now they are going to bolster and rebrand, check it out -> Taste - Domino's Pizza update.

Fast food has been in the news this week, with Famous Brands releasing their results on Monday, yesterday Taste saying that there has been a local objection to their agreement with Domino's and then this morning their full year results are out.

Taste Holdings had a similar range: "A review of the financial results for the year ended 28 February 2014 by management has indicated that the earnings per share and the headline earnings per share are expected to be between 17% and 23% higher, compared to the earnings per share of 12.8 cents and the headline earnings per share of 13.3 cents for the year ended 28 February 2013." The stock trades at 380 cents, down 10 cents yesterday. With EPS expected at 15.4 cents in the middle for the range, Taste trades on a historical 24.7 multiple and a PEG of 1.23 times. Those are often used to see if these companies are just expensive, but what matters most are their prospects from here if you are considering buying them (Famous Brands too). Let us be clear, we think that the sector, casual dining is a fabulous investment in emerging markets. It is part of the broader aspirational consumerism theme that we like.

This is big. Well done to the fellows over at Taste for having secured the exclusive Master Franchise rights (30 years) for Domino's Pizza for seven Southern African countries, obviously including South Africa. Domino's, for those of you who do not know are the biggest pizza outlet in the world and are synonymous with the food that is right up there with the comfort food of choice. Cheese, melted on a crispy base, with your favourite other foods. Piping hot.

Taste holdings released a voluntary sales update yesterday which caused the share price to shoot up over 10%. The Jewellery business which is now responsible for more than 50% of revenues grew sales by 4.2% which was actually on the back of fewer jewellery stores. What excited share holders however was the 26.6% increase in sales from the food division. Same store sales increased only 5.4% so this growth is on the back of new stores and a change to their business model whereby franchises are now required to get their supplies straight from the Taste holdings in house.