Gold Coast company Retail Food Group shares plunge after $87.8m loss, news of outlets closing

SHARES in this troubled Gold Coast company have plunged to a decade-long low that has seen more than half a billion in value lost in three months.

The food franchisor swung and $87.8m half-year loss from a $33m profit the previous year.

SHARES in Gold Coast’s Retail Food Group have resumed trade at its lowest price in a decade, after the troubled company said it would close up to 200 of its Australian outlets.

The company has lost more than half a billion dollars of its market capitalisation since stories of a damaging franchise model broke late in December.

The franchisor, which operates Gloria Jeans, Michel’s Patisseries, Brumby’s Donut King, Crust Gourmet Pizza and more, posted a $87.8 million first-half loss on Friday, down more than $120 million on last year’s $33 million profit for the same period.

RFG shares, which were suspended from trade on Wednesday after failing to release its half-year results on time, hit $1.03 cents this morning, their lowest mark since December 2008.

By 10.30am, RFG shares were down 69 cents, or 33.8 per cent, at $1.35 - shedding $126 million in the first 90 minutes of trade.

RFG is also battling a $1.62 million debt claim from a company run by the partner of its major shareholder and former managing director Tony Alford.

RFG denies they owe any money to Alicia Atkinson’s Exit 57 company, which is in liquidation.

A franchising scandal has taken a massive slice from RFG’s market capitalisation.

The company said at least 160 of its domestic franchise operations, which include Donut King, Michel’s Patisserie, Pizza Capers and Gloria Jeans, are “unsustainable over the long-term” and flagged their closure by the end of next financial year.

The company declined to specify which stores will be shut down, but said no brands would be discontinued.

Retail Food lost $100.8 million before interest, tax, depreciation and amortisation in the six months to December, compared with earnings of $55.4 million in the same period.

It also announced plans to take hits totalling $138 million for writedowns and provisions.

Shareholder dividends have been suspended.

Before the franchise scandal shares were trading at $4.40.