RFG issues COVID-19 response
DONUT King owner Retail Food Group will pause non-essential capital spending, freeze recruitment and slash director fees by 20 per cent as it deals with the fallout from the COVID-19 crisis.
Internationally the impact has been more severe with 200 outlets "temporarily closed".
The company in an announcement to the ASX this morning said it was withdrawing its FY20 underlying pretax earnings guidance of between $42 million and $46 million.
It said it has been closely monitoring the COVID-19 situation, including the new restrictions on social gatherings, which restrict cafes and restaurants to takeaway only.
RFG said this will impact its coffee and donut franchises, which include Gloria Jeans.
"A reduced customer count amongst RFG's domestic franchise network, as a consequence of the increasingly onerous restrictions made in a series of announcements by the government since last week, is anticipated by the Company (and supported by recent trading data referable to that period)," the statement reads.
"The trend will likely be more pronounced, in the Company's view, amongst outlets operating within shopping centres.
"Given these matters, together with the significant uncertainty that exists in relation to the duration and impact of the COVID-19 pandemic, the Company no longer considers it appropriate to maintain its existing FY20 guidance, which is now withdrawn."
Executive chairman Peter George said the crisis was impacting franchises different with Brumby's Bakeries seeing strong demand for bread and other bakery products.
He said there has only been a "handful" of domestic closures, however, the impact overseas has been more severe with 200 stores closing "temporarily", including 29 in the US.
Mr George said the company is doing everything it can to support its franchises, including "vigorous representation of their interests to landlords", and supply chain management.
He said the company anticipates it will need to provide additional financial support to franchises as the situation changes.
Originally published as RFG issues COVID-19 response