Southport’s Retail Food Group downgrades profit guidance again in wake of franchise allegations

LAST month beleaguered Gold Coast franchisor Retail Food Group flagged an eye-watering 34 per cent drop in profit for the first half of the year. Today it revealed the situation is even worse.

Crust Gourmet Pizza, first official vegan pizza, the Herb Crusted Al Funghi. Picture: supplied.

BELEAGUERED Gold Coast franchisor Retail Food Group has conceded a bigger slice than it thought had been carved from its bottom line, revising its profit guidance for the first half of the financial year.

But the Southport-based company has not specified the size of the profit downgrade, saying only it would be “less than” the $22 million net profit it foreshadowed in December, which was already 34 per cent down on the previous year.

RFG, which runs the Pizza Capers, Brumby’s, Gloria Jeans and other brands, took a half-billion plunge in value in the wake of allegations by franchisees of damaging business models.

RFG told the ASX this morning it had finalised master franchise agreement to take its Crust Gourmet Pizza and Donut King Brand Systems to the United Kingdom.

Retail Food Group managing director Andre Nell.

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However it said revenue from the sales could not be included in the results for the first half of the year, which it had previously flagged at a $22 million net profit.

RFG last month flagged a 34 per cent loss in profit for 1H18 on top of a $445 million plunge in the company’s share value.

The company is yet to release a guidance for the full 2018 financial year and are still preparing the results for the first half.

Shares in RFG had recovered from the low of $1.60 on December 20 to $2.47 yesterday, but had dropped this morning to $2.32.