Retail Food Group posts second profit downgrade in three weeks

Written on the 9 January 2018 by Paris Faint

Retail Food Group posts second profit downgrade in three weeks

RETAIL Food Group (ASX: RFG) has issued a profit warning for the second time in as many months, stating that its expected statutory NPAT for the first half will be even less than the $22 million it forecast in mid-December.

RFG initially downgraded its guidance in the wake of a Fairfax investigation which scrutinised dealings with franchisees under its brands including Pizza Capers, Brumby's and Donut King.

The company's latest warning stems from "additional transactional matters" which continue to impact its bottom line.

RFG also says that revenue from new master licenses in the UK will only begin factoring into its FY18 figures, not its results in the first half.

"The company has finalised certain new master licenses contemplated by its announcement of 19 December 2017," the company said in a statement.

"However, given recent variation to an element of the commercial terms the revenue derived from these transactions will now be included in RFG's full year results for FY18 (but not for 1H18).

"Together with further consideration of additional transactional matters impacting 1H18, RFG now expects its statutory NPAT for 1H18 will be less than the $22 million advised on 19 December 2017."

Since the Fairfax investigation went public, the master franchiser has been beset by troubles including a single-day share price collapse of more than 20 per cent on 19 December.

At the time, RFG said the media coverage which reported scathing accusations against the group and suggested it was mistreating its franchisees was partly to blame for the fall in sales.

It also held tough retail conditions in Australia responsible.

RFG shares are down 5.6 per cent at around 1pm (AEST). Priced at $2.33, the company's share price has slumped by more than two thirds since January 2017 when it was at $7.07.

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Author: Paris Faint

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