Collins has not deemed Sizzler a ‘core’ business since 2015 and has progressively shut stores since then. It has not opened a new Sizzler store for almost a decade and has ceased investing additional capital in the brand.
Morgans analyst James Barker said Collins plans to wind down the Sizzler Australia operations and focus on its Sizzler franchisees in Asia, where it licenses stores in Thailand, China and Japan.
“The nine restaurants left in Australia have been flagged as non-core, and Collins is looking to wind them down or convert them into Taco Bells where appropriate,” he said.
“The Sizzler Australia business had lower returns relative to the rest of the group and was determined non-core after a strategic review.”
Sizzler’s revenue contributes to a very small part of Collins’ broader business, which has performed very strongly despite the coronavirus slowing down sales across its KFC and Taco Bell brands.
KFC Australia sales grew 3.5 per cent on a comparable basis, and the segment’s earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 10.6 per cent to $132.7 million. In the first seven weeks of the 2021 financial year, KFC sales have continued to grow, up 11.6 per cent.
Collins’ KFC operations in Europe, where it runs 40 restaurants across Germany and the Netherlands, increased revenue by 8.3 per cent to $134.1 million, however, earnings fell significantly due to a $6.2 million impairment.
Overall revenue for the whole business rose 8.9 per cent to $981.7 million, and underlying net profit was up 5.1 per cent to $47.3 million, a result chief executive Drew O’Malley said was a testament to the company’s strength.
Collins shares jumped over 13 per cent in late trading to $9.47 on the back of the results.
“While today we are quite clearly operating in an unprecedented business and consumer landscape, we are pleased to announce that our full-year financial results have nonetheless continued to demonstrate strong growth in sales and earnings,” Mr O’Malley said.
Collins declared a final dividend of 10.5 cents per share, bringing the full-year dividend to 20 cents. It will be paid on July 30.