Spur sees profits soar despite multimillion-rand tax bill

Spur’s speciality brands and international business are ticking over nicely, helping drive the group’s half-year profits in a tough economic environment.

In a trading update on Monday, the Spur Corporation said sales for the year ended June 2023 had surged by almost a quarter and profit was expected to have increased by between 78% and 83%. 

The group’s speciality brands, Hussar Grill, Casa Bella and Nikos, are up 42.2% year-on-year, while international brands were up 27.6%. International restaurant turnovers also increased by 17.8% on a constant exchange rate basis.

The group, due to release its annual results on 22 August, said it is expecting to report earnings per share – an indicator of a  company's profits – of between 256.91 and 264.12 and headline EPS, based entirely on operational, trading and capital investment activities, of 256.70 to 263.91. Both are expected to have increased by between 78% to 83%.

Shareholders were reminded that the profit for the previous financial year included a one-off income tax charge of R22.034-million related to its dispute with the South African Revenue Service.

The group said it had achieved a strong trading performance for the 2023 financial year, with franchised restaurant sales increasing by 23% on the prior financial year, with H1 sales growing by 31.5% over the comparable period of 2022. 

“Although economic conditions remain challenging in the face of higher inflation and severe pressure on consumer disposable income, the group’s business model continues to demonstrate its resilience,” the statement said.

In the second half of the 2023 financial year, group sales increased by 15.1% over the comparable period of the prior financial year.

In a constrained consumer trading environment, the group has invested in marketing and increased brand awareness with value-added campaigns, sponsorship activity and outdoor exposure that increased restaurant foot count by 13%. 

John Dory’s and RocoMama are the group’s two underperformers, growing sales by 8.7% and 9.6% respectively. 

On 27 July, Spur announced it had acquired a 60% share in the Doppio Group, which owns speciality restaurant brands Doppio Zero, Piza e Vino and Modern Tailors, with a portfolio of 37 franchised and company-owned restaurants as well as a bakery and central supply business.

The first Doppio Zero was opened by founders Paul Christie and Miki Milovanovic in Greenside, Johannesburg, in 2002. In the financial year to February 2023, the Doppio Group generated total sales of more than R600-million. Doppio’s 669 employees will be transferred from the Doppio Group and Christie and Milovanovic will continue as executives for a minimum of five years.

The Spur Corporation’s interim results, for the six months ended 31 December 2022, cited concern about challenging market conditions, higher inflation and a dramatic increase in the level of rolling blackouts, which directly hurt the supply chain.

And yet, despite the mounting pressure on disposable income, the group said it continued to attract customers to restaurants with its distinct and differentiated value proposition. DM