Headline earnings per share (HEPS) in casual restaurant group, Spur Corporation, plunged 38.4% to R2.09 after adjusting for a R129.5 million payment provision for litigation brought by GPS Food Group.
An arbitrator ordered Spur to pay GPS R74.6m in damages from a legal dispute that emanated from a rib processing joint venture that turned sour. The long-running dispute started in 2019.
Pre-tax profits in Spur Corporation for the full year to June subsequently fell 19.4% to R323.6m, although it still declared a 9% firmer dividend of approximately R3.20 per share. Spur’s annual results matter for investors because they provide a comprehensive snapshot of the company’s financial health, operational resilience, and future prospects.
Spur said that excluding the impact of the GPS Food Group, adjusted HEPS for the year would have increased by 8.9% to R3.70. The quick-service restaurant group closed the period with an unrestricted cash balance of R493.8m compared to R477.1m a year earlier.
Operations for the year under review faced a highly challenging trading environment marked by constrained consumer spending, rising input costs, heightened competition, and labour as well as skills pressures, group directors said in a statement.
Shares in Spur Corporation surged 3.70% in afternoon trade on the JSE to R42, reversing the stock’s 2.1% and 1.2% slide in the past seven and 30 days, respectively.
Consumer trends for its business also trended towards value, convenience, and digital engagement against the backdrop of competitive pressure intensification across eating-out and order-in occasions. This pressure mainly emanated from general quick-service restaurant players, aggregator-led offers, and strong promotional activity in categories such as burgers, pizza, and family dining.
Nonetheless, franchised restaurant turnovers firmed up by 6.9% to R12.3 billion, while revenues for the year trended up 8.5% to R4.2bn.
“The marketing and operations teams continue to activate new value-added campaigns, including shareable or combo deals, robust loyalty campaigns, and incentives to attract customers to our restaurants and bolster sales,” it said.
For Spur, menu innovation and everyday quality offerings remain key as it pursues consumers that are increasingly seeking added value. Franchisees invested in restaurant upgrades and the adoption of new formats as well as refreshed brand identities.
“Franchisees continued to demonstrate their confidence in our brands, investing over R200m in new restaurants and revamps, while creating more than 2,000 new restaurant jobs. Many franchisees are investing in building innovative kids’ play areas, which remain the key attraction for families dining at Spur,” said Spur Corporation CEO, Val Nichas.
Spur opened 42 restaurants and closed 14 in South Africa during the period under review. Its total outlets encompass 751 restaurants across 14 countries that include Zimbabwe, Namibia, Nigeria, and Mauritius, among others.
In South Africa, volume growth was driven by the Spur brand, which increased restaurant sales by 5.8%, while restaurant sales under Panarottis increased by 16.3%. RocoMamas was up 7.6%, while international sales increased by 9.8%.
In the outlook, Nichas said while trading conditions are expected to remain challenging in the short to medium term, the group is optimistic about long-term growth prospects.
“We have identified a strong runway for expansion and believe our brands are far from reaching saturation in South Africa or beyond. We will continue to expand our presence in existing markets while entering additional African countries over time,” said Nichas.
The National