KLE cuts some losses, looks to franchises for value
Losses at KLE Group Limited were sharply reduced from $56 million to $39 million at yearend December, and CEO Gary Matalon is telegraphing that he expects to stay on that trajectory.
The company is gearing up to deliver returns to its shareholders, particularly with the pending franchising of the Usain Bolt Tracks and Records (UBTR) brand, and expects the first franchises to launch this year, Matalon said.
"We should be in a position to sell a franchise in New York by the end of March or early April," he told the Financial Gleaner, adding that the required registration process for that state has commenced.
Locally, a UBTR franchise is expected to open on the north coast, he said, pending the completion of the legal and regulatory processes.
"In terms of the time line, I am suggesting we would look to close the first two franchise deals before the end of this year," Matalon said.
KLE operates Famous Nightclub along with the UBTR eatery, having sold its Fiction nightspot in March last year. The company retains a minority stake in Fiction.
The company cut its net losses largely by reducing expenses. Annual turnover fell from $334 million to $219 million. The restaurant segment contributed revenue of $194 million, while clubs accounted for $63 million down from $164 million due largely, Matalon said, to the closure of the Fiction outfit. The segment results include other income.
"Now that KLE has reorganised its existing business unit operations to respond to the current and projected conditions within their respective markets, a major emphasis is being placed on growing the business through the introduction of new revenue streams," the company said in a statement filed with its annual results.
KLE's net book value fell from $63 million to $24 million at yearend. Long-term debt of $61 million is almost three times larger than its capital base.