Flannerys rescue plan

Health food chain can return to profitability

THE boss of the Gold Coastfounded Flannerys health food chain says it can return to profit after a shot in the arm from creditors.

The Natural Grocery Company Pty Ltd, which owns Flannerys and other health food brands, fell into voluntary administration in November after repeated financial losses and the failure of a turnaround plan.

A number of its stores were closed as a result including Taringa and Wynnum.

Last week creditors voted to approve a deed of company arrangement (DOCA) under which the majority of creditors will receive between 40 and 100 cents in the dollar. Staff are to get their full entitlement.

The DOCA preserves 10 stores of the 20-strong network, including Miami, Benowa, Robina and Paradise Point, which has been bought by the previous franchisee owner.

The other stores to remain open include five in southeast Queensland, one in Sydney and one in Lismore. One hundred employees have been made redundant out of a 400strong workforce.

CEO Fergus Collins, who had headed Metcash supermarkets, joined The Natural Grocery Company prior to administration. Mr Collins said the DOCA left the firm with a “viable” business to build on.

“The business with 10 stores and a cafe (on the Sunshine Coast) is a profitable network that will look to support the customer base and grow.”

Mr Collins would not be drawn on what mistakes he believes were made prior to entering administration other than to refer to “excessive rents” in Sydney. He has focused on talking to suppliers and emphasising the key role Flannerys plays in the market.

“It is important to have offers like Flannerys in the marketplace. It is important for suppliers to use that as a test field,” he said. “That has been my conversation with suppliers. They realise they have got to support this industry as well because it is a major part of their MPD (marketing and product development) as well.”

A creditors report prepared by administrator Timothy Cook, of Balance Insolvency, shows gross margins declining from 43 per cent to 33 per cent between FY18 and FY19 while the company’s loss ballooned from the $446,830 to $7.968 million.

Mal and Berice Flannery established Mrs Flannery’s – now known as Flannerys Organic & Whole Market – on the Gold Coast in 1973.