Tue, Feb 19, 2019 - Page 11 News List

China revenue declines narrowing: 85°C owner

By Chen Cheng-hui  /  Staff reporter

Gourmet Master Co (美食達人), the operator of cafe and bakery chain 85°C (85度C), posted weaker revenue last month due to weakening sales in China, but the business remains on track for a recovery, with last month’s decline narrowing from the previous two months.

Consolidated revenue for last month fell 2.67 percent year-on-year to NT$1.97 billion (US$63.87 million), compared with declines of 5 percent and 6 percent in the previous two months, Gourmet Master said on Thursday last week.

“The company’s business is expected to gradually return to the pre-Chinese boycott levels of August last year now that China operations have shown signs of sales improvement,” KGI Securities Investment Advisory Co (凱基投顧) analysts Angus Chuang (莊政翰) and Jenny Liu (劉昃恩) said in a note on Friday last week. “That will help boost the company’s profitability and serve as a catalyst to its share price.”

Gourmet Master, which counts China as its biggest market, reappeared on Chinese food delivery platforms in the fourth quarter of last year after being delisted in the previous quarter as part of a Chinese backlash against President Tsai Ing-wen’s (蔡英文) visit to one of its US outlets on Aug. 12 last year.

Sales in China fell 9 percent year-on-year last month, but the decline was smaller than in November and December, thanks to new product launches and stepped-up online marketing, KGI said.

With the improvement in same-store sales growth in China, the launch of its new US central kitchen by the end of this quarter and plans to open more US outlets this year and next, the company’s operating margin is expected to steadily rebound from a near three-and-a-half-year low of 7.1 percent in the third quarter of last year to 7.4 percent last quarter and 8.6 percent this quarter, reaching the double digits next quarter, KGI said.

Separately, Tai Tong Food & Beverage Group (TTFB, 瓦城泰統集團), which operates six restaurant chains in Taiwan and China, posted consolidated revenue of NT$368 million for last month, up 20.32 percent year-on-year.

The company said it is upbeat about its outlook for this month due to the Lunar New Year holiday and the Feb. 28 national holiday.

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