Retail Food Group shares at new low 43.5c with $80m market value now below a third of $267m debt

SHARES in Retail Food Group have reached another low, plunging to below a third of its debts. Here’s what it could mean

RFG shares are worth far less than a cup of coffee. Picture: iStock

SHARES in Southport-based Retail Food Group have reached another low, plunging more than 4.4 per cent to 43.5c.

RFG’s market capitalisation was worth $79.3 million at the close of market today, below a third of the $267 million debt stated in the company’s half-year results.

Less than a year ago, shares were trading as high as $5.14 for a market cap of $939.34 million.

The Gold Coast company has a huge task ahead in meeting its debt obligations, which require it to more than double its pre-tax earnings next financial year.

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Richard Hinson, the new boss of troubled franchise operator Retail Food Group, will have to bake bigger earnings this year if the company is to avoid action from its lenders.

The shares have lost almost half their value this month alone, plunging from 80c to 72c on June 6 after the company flagged a net loss of $87.6 million for the financial year, pushed by a payout to departed managing director Andre Nell.

RFG said “one-off turnaround costs” and impairment charges booked on December 31 would drive down an underlying net profit after tax of $34.5 million.

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Two former Retail Food Group executives: Andre Nell and Gary Alford. Photo: Steve Holland

The company had previously flagged impairments including writedowns on some of its brands and the cost of closing up to 200 stores.

The company said it was hoping the loss would be slightly cushioned by $3 million in international licence fees it hoped to receive before the end of June that it was unable to include in the guidance.

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 in March, down more than $120 million on last year’s $33 million profit for the same period.

The company was struck from two key market indices on June 18.

Among the conditions of its extended loan terms is a requirement to meet its underlying pre-tax earnings of $90 million for financial year 2018-19 — more than twice what it expects to book for this year.