Taste Holdings’ sale of its luxury jewellery division has raised questions in the market concerning the franchise manager’s debt load and ability to finance the expansion of Starbucks and Domino’s Pizza outlets in South Africa.
Taste announced that they will not be continuing with their jewellery sales division and stated that they do not believe that the tough economic and retail trading climate is conducive to a sale.
“We have not suspended the sale. We continue to engage with potential acquirers,” Taste stated. The company refused to comment further as they are in a closed period for their upcoming financial results. a successful sale would enable Taste Holdings to focus on expanding their food business.
Damon Buss, the equity analyst at Electus Fund Managers, said Taste could be halting the sale because they cannot find a willing buyer that would pay their asking prices.
“The key issue for them currently is that any potential buyer knows the situation that Taste Holdings is in. The company needs capital to fund the roll out of the food business. Hence, a potential buyer can probably be quite cheeky with the price they offer for the luxury business,” said Buss.
The group continues to face losses after the costs of opening Starbucks outlets and merging Scooter Pizza and St Elmo’s into Dominoes.