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RFG - Retail Food Group

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galumay said:
Have a look at the amount of debt, it basically makes the business worthless.
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Ah ok thanks, so I found the figure $250M debt using the Etrade balance sheet figures I have which are old end of FY17. But it has a revenue of 348.5M? And then net profit 61.9M which I think mean revenue minus the operating expenses, I would expect that includes debt payments?
It also has great growth rates over a 10yr and 5yr period, it does show some poor results for the past year to Jun 2017, so must have had a bad year and I am guessing a bad year this year. I can also stomach a debt:equity ratio of 53% with the growth rates it has.
To get a further understanding would you typically have to follow a business for a period of time to understand it or can an experienced person just glance at the numbers? To me this one looked pretty good on paper, but I understand this is likely not correct based on the share price plummeting.
 
The Group expects FY18 underlying NPAT to be approximately $34.5 million and statutory NPAT to be a loss of approximately $87.6 million, taking account of the substantial impairment charges booked at 31 December 2017.




 

Well i followed it for a period of time, then bought it, ended up losing 10's of thousands of dollars - so take my comments with a grain of salt.

In general a detailed reading of the most recent Annual report should give you some insight into the health of the business.

In RFG's case it looks doomed on paper, massive debt, crashing revenue, massive negative press around the franchise business model, the growth was funded by debt & capital raising, it turned out to be an illusion once the business model collapsed.

Think about it probalistically, sure there is a chance they can somehow turn the business around and survive, maybe based on the coffee business, but even optimistically its hard to see the business being worth much going forward, on the other hand there is a real chance that they cant trade out of this and end up folding. That outcome is what I call catostrophic risk in a business. Are you happy to risk the real possibilty of losing 100% of your invested capital for what looks like a fairly unlikely gain of an unquantified amount? Thats the sort of asymmetric risk I prefer to avoid!
 
notting said:
It's priced at that by the market, but if it can manage the debt with cashflow which the creditors are signaling that they can
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If the lenders believed that they could manage the debt with cashflow they wouldn't be pressing for asset sales.

Just glance at network sales and ebitda cpo especially in the BCD dvision. It's going to be hard to pay creditors and have enough left on the table for shareholders. The worst bit is I would expect the brands to continue to deteriorate for the remainder of the year as franchisees close down and are not replaced because of all the negative publicity. Any potential franchisee just has to Google "Michelle's/Donut King/Gloria Jean's franchise" and get wall to wall negativity.

It's not the same as hoping for a commodity price recovery and buying the marginal producer.
 
Yeah but, they will be left with the performing ones.
They couldn't have the kind of cash flow and historical profits they had if they were all losing enterprises.
They were just funding the growth with not so good ones, on the back of bankrupting Franchisee operators!
They should get that Vita group chick in to manage all the knew startup stalls. She's looking to diversify!


(I don't think, Jims Coffee would be so good LOL}
 
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If this goes into liquidation, it's going to be worth.... about....

-$1.50 to $0.26. That's negative $1.50.

It's not a business you'd want to hold once earnings goes to heck. Too much "intangibles", too high debt, hardly any hard assets.




Chart show today's closing $0.54cps. Way above any asset backed measure.

You'd want a business like this to keep on earning. Given the macro environment; its own business model and offerings; its reputation... i.e. them $669M in intangibles... not going to be pretty.

Though that's not to say its market price won't go up etc. But over the medium to longer term, quite possibly terminal.

btw, Commsec's market cap for RFG is wrong by some $20M under. Share prices have been issued since its last report.
 
Check this out....



In 2015, the market price implied an expected growth p.a. of about 10% to 13%. The couple years before that they expect 5% and above per annum.

That's high expectation.

When the business can't deliver, and most business cannot deliver, definitely not consitently... When that happens.... bam!
 
Have always been a terrible business too.







Inventory Turnovers improved a lot past few years. But takes longer to receive payables.




Yup, margin dropped. i.e. prices dropped so sales/inventory turned faster.

Still pretty good margin though. But oh yea.... franchisees getting screwed to produced these margins for RFG?

 
And the numbers were lies!


Such a pitty. Gloria Jeans coffee is the best coffee in the country from a franchise outlet by a country mile runs absolute circles around fricken StarBucks which is the most overrated typical American crap.
And go buy a 'Cape Seed Loaf' toast sliced from Brumby's best bread on the volume market too. Sad these dickheads have stuffed it up so much. Maybe they could sell some of the outlets off as stand alone stores and give them access to the ingredients some how.
 
I just realized that the cape seed loaf that is the best bread around from a franchise is actually from Bakers delight. So it's only Gloria Jeans that matters now
 
After the brief blip up on 29 June, the RFG share price has continued heading down and is now basically back to where it was on 28 June. Gravity truly has this company in its grip.

FY18 financial results are due in August. In the absence of any positive news in the meantime, RFG should continue to head south.

 
Hey Fatty!
Feel like stuffing your face?



Instead of displaying donuts neatly lined up on racks, a dozen Donut King franchisees have started piling donuts - frosted, jam-filled, and sugar coated - on plates of different sizes, shapes and heights in glass-fronted cabinets.

It's a cornucopia of temptation and it's proving irresistible to customers.

Sales at one Donut King store that's part of the pilot program have risen 15 per cent, says Hinson, who is working on similar merchandising changes for Retail Food Group's other brands including Gloria Jeans, Brumby's Bakeries and Michel's Patisserie.

Like I said near death experiences can provide for the greatest turn around...
 
The SP decline has flattened out, 74 Million market cap is probably about right considering the previous bad news flow, RFG probably isn't going to zero, maybe they should re band as Gloria Jeans and be done with the rest.
 
From a technical perspective, the last 2 days were on as low as volume as I have seen in months and months. Not suggesting 'this is the end of the selling' by any means but perhaps the landscape of the players involved has changed ever so slightly?
 
Perhaps they offloaded their distribution business to get the banksters off their backs.
Brands are good, just need to get their act together as stated earlier.
I'm enjoying in it!!
 
Retail Food Group FY18 financial results.



RFG's bankers circle as group records massive loss
 
As predicted, its cooked. No chance of paying off the debt IMO. It will be a slow decline and then a quick death.
 
galumay said:
As predicted, its cooked. No chance of paying off the debt IMO. It will be a slow decline and then a quick death.
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I just noticed RFG was removed from the S&P/ASX 300 Index last week.

Strangely, this morning a Change in substantial holding notice was released that revealed Invesco Australia Limited had increased its holding in RFG from 12.298% to 13.385% on 07/09/18. I wonder why they would increase their holding on the same day that RFG was removed from the S&P/ASX 300 Index?
 
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