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.
I must be honest I really like the business model and some of the brands but I am slightly worried about slow same store sales. They really need to entrench these brands into the lifestyle of the average South African like Famous Brands have done so successfully. If they are not successful with their brands, this expansion could back fire. I'm sure management are well aware of this and are doing the necessary.