Famous Brands 6M - Still Struggling in the UK

This morning we received 6 month results form Famous Brands. The company now has 2 879 restaurants throughout a portfolio of 20 brands. As you know from our recent commentary, the UK business has been a disaster while SA has been OK. Let's see what the numbers say.



Having absorbed the write downs of GBK last year, this years numbers look better. Sales in SA grew by 7.1%, the rest of Africa and Middle East grew by 13%, while GBK in the UK decreased by 12.5%. They seem positive that the 70 GBK stores are making a turn around and operated ahead of the competition over the last 6 months.

Unfortunately the supply chain side of the business took some strain. In order to remain competitive in this tough environment, the supply chain took a big margin hit. Operating profits in that division dropped 19%. At least they own the supply chain which has taken some pressure off the franchise owners.

All in all these were a tough set of numbers as expected. Shareholders will at least feel vindicated with a reinstated half-year dividend of 90c a share. If you own the share I would say hold. This company will turn around with the economy. They have a great portfolio and a very neat and experienced supply chain.