Retail Food Group shares fall again
Retail Food Group’s already struggling shares have fallen again after the cafe and bakery owner issued its second profit warning in less than a month.
The Gloria Jean’s, Donut King and Brumby’s Bakery owner said first-half net profit is now expected to be even lower than the $22 million it predicted on December 19.
RFG’s shares have almost halved in value since media reports in early December accused the company of driving its franchisees into the ground with crippling fees to boost its own profits, including with high supply costs.
The company has repeatedly denied all allegations. Shares in RFG were down 15 cents, or 6.7 per cent, to $2.32 at 1115 AEDT. On December 19, the company’s shares plunged to $1.98, an eight-year low, after it forecast a $22 million first-half profit, which would be down 34 per cent from $33.5 million a year ago.
It also flagged one-off costs of $7 million. RFG partly blamed negative media reports for the sales decline. On Tuesday, the company blamed the timing of new international master licence agreements for the latest downgrade to its profit guidance.
It said it had struck master licence agreements for its Donut King and Crust Gourmet Pizza brands in the UK, but revenue from those businesses would not be realised until the second half of the financial year.
The company is also facing possible legal action after Bannister Law in December said it was investigating a possible class action on behalf of RFG shareholders. The law firm said it would look at whether RFG should have corrected its guidance earlier than December 19.