RFG - Retail Food Group

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I seen Farifax media, especially via fin review, do this kind of ramp down media speculation at this time of year before!
This one was an absolute cracker.
I suspect they got wind of the revenue downgrade before it was announced and got their buddies in too!
When they used to attack Renie Rivkin who died of stress due to insider trading, he used to say, 'there is enough room for both of us!' as an olive branch tying to shut them up!!

Try shutting up the "Free Press"?
Look what good that did him. Poor old Rene. R.I.P.

Meanwhile, RFG continues on its merry ways, much to the dismay of the Shorter Brigade.

 

[notting]

I shorted it down to 1.76, then went long, bought up to and including 1.755, 1.77, 1.78, 1 1.81, . Just sold that at 2.42
It's a love hate relationship.

I actually really like The Age 'Markets Live' Blog. It's a great service.
I think the papers should offer a pay per view service. this might help them rather than offering lock in contracts for the rest of the **** that they write.

 

[Knobby22]

I shorted it down to 1.76, then went long, bought up to and including 1.755, 1.77, 1.78, 1 1.81, . Just sold that at 2.42
It's a love hate relationship.

I actually really like The Age 'Markets Live' Blog. It's a great service.
I think the papers should offer a pay per view service. this might help them rather than offering lock in contracts for the rest of the **** that they write.

I get an Age subscription. They are the last independent Australian paper.
They broke the banks story, and got blackbanned from their advertising. They have broken lots of stories in business and in government.
The ABC has no business budget and Newscorp will never dare to ask any questions and lessen their advertising. We need the Age/SMH.

 

[Value Hunter]

As far as I'm concerned RFG is more likely to be a falling knife than a turnaround candidate.

The problems I see are as follows:
-They have expanded into too many markets and brands too quickly and they need to scale back and consolidate
-In food trends are really important and they are missing the big trends. Major food trends currently are premium, organic, healthy, international cuisine etc. Crust Pizza does a decent job of catering to the premium trend and Gloria Jeans does a good job with the Asian niche who are a growing market but most of their brands such as BB, brumbies, donut King, Michaels patisserie, etc are slowly losing relevance.
-They are burying their head in the sand about their business model, how they treat franchisees, store rollouts, etc and instead blaming external factors such as the media and the retailing environment, etc. Really at this point if the company was really trying to turn things around they would have done a full scale strategic review (to identify a course of action) and sacked/replaced certain key directors and managers. If they cannot even honestly admit problems what chance do they have of solving them?

In short I would still be steering clear of the stock.

 

[notting]

Again!
Retail Food Group has downgraded again, this time forecasting first-half net profit below the $22 million level flagged on December 19.

 

[greggles]

More RFG franchisee horror stories in the mainstream media: http://www.news.com.au/finance/smal...t/news-story/ae3d857151cd7808f01ed85cd9cc7deb

Negativity is hanging over Retail Food Group like a dark cloud. While it bounced off its lows at around $1.60, it has not been able to gain any traction since failing to break back through $2.50 and has drifted back down to $2.20.

It's looking very weak at the moment and I can't see much good news in the pipeline.

 

[So_Cynical]

Negativity is hanging over Retail Food Group like a dark cloud. While it bounced off its lows at around $1.60, it has not been able to gain any traction since failing to break back through $2.50 and has drifted back down to $2.20.

It's looking very weak at the moment and I can't see much good news in the pipeline.

Im tempted to say it wont see $1.60 again...but never say never.

$1.60 double bottom or a $1.90/$2 higher low?

 

[greggles]

Im tempted to say it wont see $1.60 again...but never say never.

$1.60 double bottom or a $1.90/$2 higher low?

I have no idea where this one will end up. It has a market cap of more than $400 million but I have concerns about the long term viability of their business model. I don't think it's out of the question that RFG could sink as low as $1 if management don't turn things around. Their brands are a bit long in the tooth and with a lot of competition out there I wonder how they will drive growth.

I reckon there's more money to be made on the short side than the long side with RFG.

 

[galumay]

I have held on, probably an error of judgement! I think the business is still worth more than its current share price, but it will take a fair while before Mr Market shares that confidence I suspect!

As someone in the industry, I suspect the coffee business may prove to be the best part of business in the future, along with Hudson Pacific.

I should learn my lesson with roll-ups! Got belted with SGH, now RFG, I think they are a much better space for traders in the early growth stage and investors like me should avoid them like the plague!

 

[kid hustlr]

I like your thoughts Galu. Those who I trust well think the current valuation is ridiculously low and as a long term play is great.

The media rampage on this has been incredible

 

[greggles]

RFG continuing its slide south today. Continued negative media coverage appears to having a real impact on market confidence. Down around 6% today to $2.05 and looking weak.

 

[Country Lad]

I like your thoughts Galu. Those who I trust well think the current valuation is ridiculously low and as a long term play is great.

The media rampage on this has been incredible

Kid, I think you are not aware of the real position. If you think the media coverage is a bit rough you ought to go out there in the real franchise world and have a look. It is far worse.

I was involved in selling businesses in the past and recently spoke to other brokers still in the game. They can't give these franchises away with numerous franchisees wanting to get out, virtually at any cost. Even the very few profitable ones are impossible to unload.
So if you make the wild assumption that RFG suddenly sorts out the problems and the franchisees become profitable, RFG's income will drop significantly as this will involve huge reductions in franchise fees and other income from the franchisees, resulting in further RFG downgrades.

And this does not even allow for no growth as very few new franchises being established as nobody wants to take them on, and the banks are becoming very reluctant to lend to the franchisees.

I think it is likely that in the near future you will see new profitable franchise names coming into the market in competition to those of RFG.

In my mind, whichever way you look at it, there really isn't any upside for RFG.

 

[greggles]

And this does not even allow for no growth as very few new franchises being established as nobody wants to take them on, and the banks are becoming very reluctant to lend to the franchisees.

I think it is likely that in the near future you will see new profitable franchise names coming into the market in competition to those of RFG.

In my mind, whichever way you look at it, there really isn't any upside for RFG.

Great post Country Lad.

In addition to all of the issues you mentioned, there is now talk of a class action against Retail Food Group by "hundreds" of disgruntled franchisees: http://www.news.com.au/finance/smal...s/news-story/aef7af8be7c319f3c53155f7bfd7b619

I can't shake the feeling that the worst is yet to come for RFG.

 

[notting]

It was a rather well orchestrated scam and the ones who pulled it have long gone and are now not involved in the company as it dies.
They destroyed some really good names.
Gloria Jean made the best coffees and was a great business. Now it's all tarnished along with the others.
Some of the franchises have halved in number of outlets.
There needs to be a clean out and restructure, share holders need to demand new board and new management.
They need to find some competent people to run the franchise with integrity.
Hopefully they can make it into something but it's not worth much as it is.

 

[notting]

Had a positive day today after announcing yesterday that a Former Metcash executive Richard Hinson was hired in a newly created chief executive role to oversee its embattled Australian store network.
So if it could consolidate here, keep the franchise outlets it still has and just get the thing running like a real business again then perhaps those established and, what were good stand alone brands, can keep going.
They will have to cut the div.
Can't believe their expanding the scam model into the UK! That could be ugly.

This news was out yesterday but perhaps it took a bit of contemplating before people decided that it could be turned around.

Volume wasn't special it just bounced off the 61.8% fib of the previous bounce.

 

[kid hustlr]

Kid, I think you are not aware of the real position. If you think the media coverage is a bit rough you ought to go out there in the real franchise world and have a look. It is far worse.

I was involved in selling businesses in the past and recently spoke to other brokers still in the game. They can't give these franchises away with numerous franchisees wanting to get out, virtually at any cost. Even the very few profitable ones are impossible to unload.
So if you make the wild assumption that RFG suddenly sorts out the problems and the franchisees become profitable, RFG's income will drop significantly as this will involve huge reductions in franchise fees and other income from the franchisees, resulting in further RFG downgrades.

And this does not even allow for no growth as very few new franchises being established as nobody wants to take them on, and the banks are becoming very reluctant to lend to the franchisees.

I think it is likely that in the near future you will see new profitable franchise names coming into the market in competition to those of RFG.

In my mind, whichever way you look at it, there really isn't any upside for RFG.

https://www.google.com.au/amp/s/see...icle/4140076-retail-food-group-aussie-bargain

I don't hold & never will. It's not my game, I have a vested interest through viewing others on this.

I'm at the shops now, there's a donut king and a Gloria jeans going well. I don't shop there but many do. One off analogies don't make an investment case but at some point and at some price the needle turns to make things look attractive.

I think these brands will still be here in 10 years time. Media noise and hopeless management aside my limited understanding suggests there is some kind of opportunity here.

People will always have a dream to run their own show the rfg model isn't broken.

 

[satanoperca]

Come on guys, the rules of any business, service your customer to meet their desires, needs and requirements.

For the franchisees, there customer is the end consumer, are the products they are offering any better than those offered by others?
Do they have any uniqueness about them?
Or are they simply just in the market place for the moment?

For the Master Franchisee there customer is the franchisee.
Same rules apply.
Are they servicing their customer?
Are they meeting their desires?
Are they fore filling their needs?
Are they providing innovation in the market place?
Are they providing something unique?

For the master, the answer is NO. But maybe they don't care, they are still making money for themselves, and f---k their customers (franchisees).

Maybe their products and offerings are outdated in a rapidly changing market place.

Can they change? Who knows!

Do they want to change? Who knows!

Do they care? Who knows!

Have the primary owners of RFG made a lot of money? Yes they have

So answer some of the questions above and you will find the answer to where this group will be in 10 years time.

 

[galumay]

So answer some of the questions above and you will find the answer to where this group will be in 10 years time.

Its quite possible those questions will have no relevance to where RFG will be in 10 years time. The coffee and Hudsons may end up being the business and the franchise model may disappear.

Its also entirely possible RFG wont exist in 10 years time. That is the dilemma for investors, understanding the range of possible outcomes, and then trying to assign probability. No one said it was an easy game!

I suspect that RFG will surprise on the upside in the long term, but my suspicion isnt a strong enough conviction to have me add to my current exposure to the business.

 

[greggles]

RFG share price got knocked down starting late Thursday afternoon and continuing this morning. It recovered to $2 by the close today but the sell down looked like someone taking the opportunity to get out.

 

[notting]

RFG share price got knocked down starting late Thursday afternoon and continuing this morning. It recovered to $2 by the close today but the sell down looked like someone taking the opportunity to get out.

Today's the first serious trading day of the year for buy and hold type investors. So it's expected to be corrective and rocky.
All the action was straight out of the blocks then it climbed it's way back up for the rest of the day. Quite positive overall.
But Bond yields in the US have tipped up to their highest point in years so the whole thing could be about to get volatile.