The Collins Foods Ltd (ASX: CKF) share price is in the spotlight after giving a FY27 trading update.
Collins Foods is a KFC franchisee operator in Australia and Europe.
FY27 trading update
The company is holding its annual general meeting (AGM) and this gave the company the opportunity to give a trading update for the first 17 weeks of FY17.
It revealed that sales were up 6.6% year on year, on a constant currency basis.
KFC total sales were up 6.4% in Australia, down 2.5% in the Netherlands and up 44% in Germany.
KFC same-store sales increased 3.4% in Australia, declined 3.4% in the Netherlands and fell 5.3% in Germany.
The company also gave an update for the last four weeks, which showed a strengthening performance in Germany.
For the past four weeks, KFC total sales were up 5% in Australia, 4.9% in the Netherlands and 58.8% in Germany. KFC same-store sales rose 3.1% in Australia, 3.1% in the Netherlands and declined 0.1% in Germany.
Collins Foods said that KFC Australia continues to perform strongly despite lapping an extremely strong Christmas in July activity in the prior year. It saw several weeks of all-time record sales during the recent Christmas in July campaign.
The ASX share expects a number of initiatives will help significantly strengthen organic performance. That includes impactful innovations and promotional windows, initiatives to drive volume in the core range, extended late-night hours and the national rollout of ‘global beverage platform’ Kwench.
Collins Foods also said that breakfast trials start in September in selected Gold Coast restaurants.
In Europe, the company noted that in the Netherlands, a Halal-certified range of products was launched just a couple of weeks ago and early results have been “extremely positive”.
In Germany, it will remain disciplined with the investments it makes. When it’s confident that sustainable same-store sales growth has resumed, it expects more restaurants will meet returns hurdles and new store numbers will accelerate.
Taco Bell exit
In August, the company transferred 20 Taco Bell restaurants to the joint venture between Taco Bell international and Restaurant Brands Australia. The remaining seven restaurants were closed during FY27.
Final thoughts on the Collins Foods share price
I don’t know how the market is going to react to this, but it’s good to see that the Europe performance is improving.
I think it’s a very promising business with large growth intentions in both Australia and Europe. It’s not priced for a lot of growth, so I think it’s a long-term opportunity at today’s valuation.
