Struggling Gloria Jeans and Donut King operator Retail Food Group has slumped to an $111 million first half loss as cafe sales dive, outlets are shut, and poor press clings to franchise opportunities.
Profit at the Brumby's Bakery, Crust, and Michel's Patisserie owner fell by 25 per cent for the six months to December 31 following $123.7 million in impairments, write-downs and provisioning, while total revenue dipped 3.4 per cent to $170 million.
The company said full-year earnings are expected to slide by at least a 32 per cent.
Retail Food Group has struggled financially since accusations in late 2017 that its franchisees had been run into the ground with exorbitant fees, high marketing and food costs, poor quality food and a lack of support.
The company registered a $306.7 million full-year loss in FY18 and accelerated its store closure program in August.
Executive chairman Peter George said the group had gone some way towards clearing the decks and stabilising the performance of continuing operations, although "a lot of work remains to be done to resurrect the financial health and performance of the business".
“We remain committed to equipping our franchisees with the best possible products and support to enhance their own profitability and expect these benefits to start materialising in the first quarter of FY20,” Mr George said.
In August the company said it would close 250 domestic stores - up from the previously announced 200 - by the end of the 2019 financial year.
On Thursday the company said it had shut 83 domestic stores and 10 mobile vans during the half, in line with guidance.
The outlets that remained registered a weighted same-store sales decline of 3.3 per cent.
Gloria Jeans and Michel's stores suffered the heaviest sales drop.
Retail Food has also announced plans to close its Bakery Fresh wholesale bakery business once contractual commitments are completed.
Group underlying earnings for the period nearly halved to $23.9 million and underlying profit was down 73 per cent to $6.6 million.
The company will not pay an interim dividend.
Meanwhile, Retail Food said it expects full-year underlying earnings to be between $43 to $48 million, assuming full year contributions from all business units.
Full-year underlying earnings were $71.4 million in FY18.
Shares in the company were last worth 27 cents, down from a four-year peak of $7.28 in September 2016.
RETAIL FOOD GROUP SLUMPS TO HY LOSS
* Net loss of $111m, up 25pct from $87.8m loss in HY18
* Revenue down 3.4pct to $170m
* Underlying earnings down 47.7pct to $23.9m
* No interim dividend, unchanged