RETAIL FOOD GROUP TAKES $18.5M HIT
Written on the 2 June 2015 by Jenna Rathbone
ONE of the city's top listed companies is set to shave $18.5 million from its earnings this year after implementing a new strategy to tap into global growth opportunities.
Retail Food Group (ASX:RFG), the Gold Coast-headquartered franchisor of Donut King, Gloria Jeans and Crust Pizza, has announced an organisational realignment, targeted at overseas expansion opportunities.
RFG, which has spent more than $200 million on acquisitions in the past year, will streamline its operations by consolidating duplicate and underperforming networks and focus on outlet quality.
As a result, the group will incur a non-cash writedown of around $18.5 million on redundant fixed assets, outlet carrying values and sub-scale brand system intangibles.
However, RFG's outlook remains unchanged with the group reaffirming forecasts for a 50 per cent increase in underlying net profit to $55 million this financial year.
RFG managing director Tony Alford says recent activity has established RFG as a "genuine global powerhouse" and the new strategies position the group to take advantage of multiple growth opportunities arising from the transformation.
"The initiatives outlined today enable RFG to consolidate its business streams and operations in order to reset its strategic direction and redefine the company's position within the markets in which it operates," he says.
RFG chairman Colin Archer added that RFG is no longer exclusively wedded to domestic retail conditions, but "is now possessed of the multiple levers for growth typical of a truly global enterprise".
RFG will also implement its first dedicated international division to support and expand its presence in foreign markets which includes accelerating the growth of Di Bella Coffee in domestic and international markets.
It has also unveiled a management shake-up which includes seperating Alford's dual roles of managing director and chief executive.
Alford will now manage the RFG team as full-time executive managing director and will focus on the broader strategic imperatives of the group, including acquisition and alignment opportunities, international development and penetration of new markets.
Alford will be supported by two co-chief executive officers - Andre Nell as chief executive officer franchise, while his brother Gary Alford has been appointed chief executive officer commercial.
Tony Alford says the company's growth requires and will be enhanced by the separation of roles and responsibilities.
"I have absolute confidence in Andre and Gary and believe the creation of joint CEO functions will ensure that appropriate resources are focused on driving the entire complement of RFG's growth initiatives," he says.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter