Shares in the Retail Food Group jumped after the operator of Brumby’s, Donut King, Crust Gourmet Pizzas, Michel’s Patisserie and Gloria Jean’s announced the appointment of a new CEO.
A short time ago, the shares were up 9% to $0.84. A year ago they were trading at $5.30.
The company has appointed Richard Hinson as chief executive officer, effective immediately.
Hinson, who started at the company as chief executive Australia in January this year, says trading conditions in food retailing are still tough but work with franchisees is starting to see a positive response.
“Our core business is fundamentally sound and we are working hard to improve franchisee relationships and profitability,” he says.
“We are revitalising the network to focus on our customers first; improving performance, driving innovation and improving communication and transparency with our franchisees. This is a 12-18 month turnaround of the RFG business.”
Hinson has almost 30 years experience in the retail food sector and has held executive positions at Wrigley Pacific and Metcash Supermarket and Convenience.
The company has been under pressure since a Fairfax Media investigation revealed hundreds of stores were going to the wall as “a result of a brutal business model”. The company says it has no evidence of franchisees underpaying staff.
The Retail Food Group in March posted a net loss after tax of $87.8 million for the first half on the back of “difficult trading” conditions.
The company has decided to close between 160 and 200 Australian outlets by the end of the 2019 financial year due to high rents and declining shopping centre performance.
The result for the six months to December included non-cash impairments and write-downs of $138 million. The impairments included Michel’s Patisserie ($45 million), Pizza Capers ($4.5 million) and Coffee Retail Division ($34.5 million).
Revenue was $195.5 million, up from $161.9 million. Underlying profit after tax was $24.7 million, down 31.8%.
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