Retail Food Group sees customers return, but permanent closures inevitable

Retail Food Group sees customers return, but permanent closures inevitable

Retail Food Group (ASX: RFG), the owner of Gloria Jean's Coffees, Brumby's Bakeries, Donut King, Michel's Patisserie and others, has observed an increase of customers returning to its outlets as COVID-19 restrictions ease across most of the country. 

However, the pandemic has sped up the permanent closure of a number of its outlets in Australia as 17 stores remain temporarily closed.

Of those 17 stores RFG executive chairman Peter George says approximately seven will be permanent closures.

"These were forecast to close in the near future, and COVID-19 has simply expedited that outcome," says George.

"Customer count has continued to improve, with recent trading data reflecting a weighted average decline amongst all brands of 13.76 per cent versus the previous corresponding period, albeit this remained well below pre-pandemic levels.

"The Company is also closely monitoring the situation in Victoria given a recent spike in COVID-19 infections and speculation regarding the potential re-introduction of restrictions within that State."

The company has also provided FY20 underlying EBITDA guidance of approximately $35 million today and anticipates net debt at 30 June 2020 will be around $25 million.

Rental relief for franchisees has been obtained in respect of approximately 415 outlets, according to George.

"This is a positive outcome for both franchisees and RFG which provides both cash-flow support and added certainty," says George.

"Negotiations with landlords regarding relief arrangements are ongoing and are anticipated to persist for the duration of the pandemic and a reasonable recovery period thereafter."

Internationally around 138 international outlets remain closed, 30 of which are now permanently shut. Around 150 international outlets are operating with limited dine-in options and a further 230 on a takeaway only basis.

"RFG expects trading conditions to remain challenging in the foreseeable term and therefore anticipates a continuation of those measures implemented by the Group in response to the pandemic to support franchisees," says George.

"That said, there are a number of positive developments within the Group's business that provide optimism for the future."

Shares in RFG are up 0.01 per cent to $0.07 per share at 10:32am AEST.

Updated at 11:10am AEST on 26 June 2020.

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