Spur flags doubling of earnings as Covid-19 recovery continues, Massmart expects huge loss

SOUTH AFRICA – South Africa headquartered fast–food chain operator, Spur Corporation, continues to see a steady recovery from Covid-19 restrictions at its restaurants and expects earnings to more than double in its half-year to end-December 2021.

Its Headline earnings per share (Heps) is expected to rise by 117%-122%, with franchised restaurant sales growing 28.3% during the period compared to the six months to December 2020, when significant restrictions on sit-down trade were in place, and by 18.0% over the preceding six-month period ended 30 June 2021.

While the owner of RocoMamas, the Hussar Grill and John Dory’s reported a pleasing recovery for the period, restaurant turnovers were 9.5% behind pre-COVID 19 levels.

Trading conditions during the period under review continued to be impacted by various levels of COVID-19 restrictions, including a prohibition on sit-down trade in July 2021.

These challenging conditions were exacerbated by widespread civil unrest in specifically KwaZulu-Natal in the second week of July 2021.

This resulted in nine of the group’s franchised restaurants being looted and vandalised, with damages totalling R29.5 million (US$1.96m). Franchised restaurant turnover was adversely impacted by R14.6 million (US$970,000) in July 2021.

“The group continued to respond to the pandemic fuelled market conditions with resilience, focusing on everyday value and convenience solutions through takeaways, click and collect services and third-party deliveries.

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“In addition, the close collaboration and partnership with the franchise network enabled several strategic initiatives to be implemented during the period, including supply chain improvements,” highlighted Spur.

Massmart expects annual loss

Meanwhile, South African retailer Massmart flagged a wider annual loss of up to R1.6 billion (US$106 million), hurt by store damage and lower trading income due to looting during the country’s civil unrest last year.

The retailer, majority-owned by Walmart Inc, said it expects its 2021 headline loss, the main profit measure in South Africa, from total operations to come in between R1.478 billion (US$98m) and R1.571 billion (US$104m).

That is at least 60% to 70% wider than the loss of R924 million (US$61m) reported in 2020.

Excluding food businesses held for sale such as Cambridge and Rhino stores, the loss is seen widening to between R938 million (US$62.3m) and R1 billion (US$66.4m).

The owner of Game stores took a significant inventory write-off because of the civil unrest.

The looting directly impacted 43 of its stores, resulting in lost trading profit of around R450 million (US$29.9m) and an accounting loss of around R650 million (US$43.2m) after insurance proceeds.

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