May 31, 2019 / 5:34 PM / 6 months ago

South Africa's Taste Holdings's earnings fall, needs another year before profitable

JOHANNESBURG, May 31 (Reuters) - South Africa’s Taste Holdings said on Friday it would take at least another year to return to profitability after the owner of Domino’s Pizza and Starbucks stores completed a restructuring of its business.

Full-year earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 44 percent in the financial year to the end of February, hampered by losses in its jewellery business, the company — which is split into food and luxury goods divisions —said.

Taste, which runs 48 Domino’s Pizza and 12 Starbucks stores, joins a long list of struggling South African retailers hit by a sluggish economy, poor retail sales, and high unemployment rates.

It said its jewellery business made a 14 million rand ($960,153) loss in the financial year ending Feb. 28, in part from booking a 39 million rand goodwill impairment at jewellery and watch retailer Arthur Kaplan.

A decrease in group revenue of 7% to 960 million rand was driven by a 12% reduction in luxury goods sales and 1% decline in food sales, it said.

Taste struggled after taking on the two global brands and introducing a centralised distribution system. It temporarily halted the rollout of Domino’s and Starbucks stores in November after reporting a loss in the first half of the financial year.

“Strong evidence of (an) operational turnaround has already emerged in the group’s 2018/19 year-end financials, but a journey of a year or more remains for restoring Taste to sustainable profitability,” Taste said in a statement.

Diluted losses per share fell to 35.0 cents compared with 51 cents in the previous full period and the company said it will not pay a dividend for the financial year just ended.

$1 = 14.5810 rand Reporting by Onke Ngcuka; Editing by Kirsten Donovan

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