Retail Food Group embraces Amazon
GOLD Coast food franchisor Retail Food Group – Australia’s largest – is engaging with Amazon and social media in an attempt to deal with a softening domestic retail environment.
Shareholders heard at yesterday’s annual meeting at Sheraton Grand that a challenging domestic retail market – reflected by reduced foot traffic at prime shopping centres – would weigh on the performance of local franchises.
Managing director Andre Nell said the performance of the franchise division was forecast to be weaker than expected in FY18.
He said while Amazon may impact on foot traffic at shopping centres, it was also an opportunity for the operator of brands including Donut King, Pizza Capers, and Brumby’s Bakery.
“There is actually an additional route to market for our commercial business for the likes of products within our coffee and our beverage range for end consumers,” he said.
“And we have been engaging with Amazon in that regard and are an approved supplier.”
Mr Nell spruiked the success of its Brumby’s Bakery bread lovers card and Donut Rush app, which had more than 400,000 downloads and reached number one on both the Google Play and Apple stores, as examples of its innovative approach to engaging with consumers.
“No matter what shopping centre we’re in, it’s about how we drive consumers to our brand system,” he said.
“It is how they engage with the brand through social media and remain loyal and are driven to the brand. It is about combating what is happening, potentially, with shopping centres.”
Shareholders also questioned the performance of the share price, which started the year at $7.15 but had consistently tracked downwards to fall as low as $4.14.
New International Financial Reporting Standards, which mean retailers such as RFG will have to recognise as a balance sheet liability shop rental payments over the entire term of a lease, impacted the price with the stock falling 11.3 per cent during one session in June.
But chairman Colin Archer also took aim at short-sellers. He said the share price did not reflect the true underlying value of the company and its future growth.
“The relentless activity of short-sellers is undermining perceptions regarding the group’s credentials, performance and future prospects,” he said.
“Your board understands that short selling is a permitted activity, however, I would implore our members to consider the potential damage to your company, and indeed your own portfolio, before lending shares for these purposes.”
Mr Nell affirmed the group’s 2018 financial guidance for underlying net profit to grow by about six per cent.
He said growth from the group’s international and commercial divisions would offset weaker-than-expected trade from its domestic division.