Gold Coast franchisor Retail Food Group flags $35M in full-year earnings following COVID-19 hit to stores
Shares in Gold Coast food franchisor Retail Food Group soared 18 per cent higher this morning following a trading update.
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SHARES in Gold Coast food franchisor Retail Food Group soared 18 per cent higher this morning following a trading update where it outlined more landlord rent concessions and earnings of $35 million for this financial year.
The company in a statement to the ASX this morning said it has seen an increase in customers returning to its stores, which include Donut King, Crust Gourmet Pizza and Pizza Capers, within shopping centres as COVID-19 restrictions have eased. It also said it expects net debt to be about $25 million by the end of the financial year.
Investors responded positively sending shares up 18 per cent to 7.2¢.
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Executive chairman Peter George said recent trading data shows customer numbers 13.76 per cent lower for the week ending June 21 compared to the previous period ending June 23 last year.
He said the “limited number of outlet closures” so far is evidence of a “resilient” franchise network.
The company said last month that 60 temporarily closed stores had reopened.
“Of the remaining 17 outlets temporarily closed as a consequence of the pandemic, we are working with impacted franchisees to facilitate reopening, however, anticipate c. 7 will be permanent closures,” Mr George said.
“These were forecast to close in the near future, and COVID-19 has simply expedited that outcome.”
Last month RFG said it had obtained rent relief for franchisees for 290 outlets for the April and May periods.
It now says that figure has increased to about 415 outlets.
The company previously took aim at landlords saying rent deferral would achieve nothing.
“This is a positive outcome for both franchisees and RFG which provides both cashflow support and added certainty,” Mr George said.
“Negotiations with landlords regarding relief arrangements are ongoing and are anticipated to persist for the duration of the pandemic and a reasonable recovery period thereafter.”
The picture was not as positive internationally.
RFG said while 150 stores are now operating with limited dine-in availability and a further 230 for takeaway, 138 remained closed despite the easing of restrictions in some countries.
Mr George said despite challenges there were “positive developments” including a restructure of its wholesale coffee operation leading to $6 million in annual cost savings.
It also provided guidance for FY20 of underlying pretax earnings – which strips out one-off costs – of about $35 million although this removes the impact of new accounting standards and the impact of lease liabilities.
The new guidance is 23 per cent below the upper range of the previous figure of between $42 and $46 million. That guidance was withdrawn after COVID-19 forced the company to stand down a majority of its staff and close a number of stores.
Originally published as Gold Coast franchisor Retail Food Group flags $35M in full-year earnings following COVID-19 hit to stores