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% 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 R14 million ($960 153) loss in the financial year ending February 28, in part from booking a R39 million goodwill impairment at jewellery and watch retailer Arthur Kaplan.
A decrease in group revenue of 7% to R960 million 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.