Veritas profits despite supply woes
"The board's focus is on ensuring profitability within each store and we are working closely with franchisees to support and maximise their performance." Tim Cook, chairman Veritas Investments
A competitive market and supply shortages have hit the Mad Butcher and the sale of Nosh could cost $2.6 million, but owner Veritas Investments has returned to a profit.
The listed company, which owns the Mad Butcher and The Better Bar Company and this month completed the sale of gourmet supermarket brand Nosh, made an after-tax profit for the six months to December 31 of $1.2m.
This was a $6m improvement on the $4.8m loss the company had made last half-year.
Revenue decreased from $19.1m to $15.9m because of the closure of three Mad Butcher stores and the sale of three bars in Hamilton.
Veritas chairman Tim Cook said the market the Mad Butcher faced was competitive and supply shortages had created challenges around product choice and pricing.
This issue was highlighted at its annual meeting last November, where Cook detailed how tight supply in the beef and lamb markets had increased prices and made it hard to offer effective promotions.
Chicken, meanwhile, had faced oversupply and prices fell, which hit revenue. The two main supermarket chains had also seen competition ‘‘intensified significantly’’, he had said.
Cook said there were 32 stores in the chain, three of which were company owned, and the franchise was a major contributor to Veritas’ profitability.
Veritas had purchased two stores during the six-month period for $228,000, while selling one at a $73,000 loss for $208,000.
‘‘The board’s focus is on ensuring profitability within each store and we are working closely with franchisees to support and maximise their performance.’’
The Mad Butcher store in Napier was also recently sold by its owner to another franchisee, but Veritas would not make any further comment on its sale at the time.
Earlier this month, a consortium of New Zealand investors who did not want to be named bought the troubled gourmet supermarket brand Nosh from Veritas for $4 million.
Veritas had been forced to sell Nosh following an ultimatum from its bank, ANZ.
Cook said the sale had been used to reduce its bank debt to ANZ, and it expected its loss on the sale would be between $2.2m and $2.6m.
The Better Bar Company, however, had exceeded its targets for the period.
‘‘A focus on improving the customer experience through enhanced menu and entertainment options and good cost control has led to improved results,’’ the company said.
Veritas revised its full-year profit guidance given the sale of Nosh, such that while revenue would fall from between $50m and $55m to between $26m and $31m, underlying after-tax profit was expected to be up to between $3.7m and $4.3m.
The company would not pay an interim dividend.