Famous Brands returns to profitability

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Famous Brands returns to profitability

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Published Date: 2021-10-14 | Source: INCE|Community | Author: The Finance Ghost

Famous Brands returns to profitability

After walking through fire last year with the impact of Covid on restaurants, Famous Brands is up 24% year to date and must be looking forward to what will hopefully be a big summer season in South Africa.

Provided the virus stays away, I'm expecting a lot of pent-up demand for entertainment and time spent with friends. If this materialises, it will be good news for Famous Brands.

The six months to August 2021 were easier than the comparative period last year but still came with major challenges. There were alcohol bans, trading restrictions and of course the catastrophic riots. Despite this, Famous Brands has not used any of its contingency banking facilities.

After recording a massive loss in the comparable period, Famous Brands expects to post headline earnings per share (HEPS) of between 89 and 109 cents for the latest period. With a share price of over R60 this is an unremarkable result, so the market is clearly pricing in a substantial further recovery.

One thing the pandemic has done is force businesses to cut unnecessary costs and streamline operations. After a disastrous experience in the UK and after the challenges faced in South Africa, Famous Brands may perform well in a market that is no longer impacted by trading restrictions.

Shareholders certainly seem to think that is the case.





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