Wednesday , October 27 2021

Performance of Gloria Jeans owner RFG is 'unsustainable', says chairman



"While there are some encouragement from our franchise customers about improvements in the network, the current financial performance of the company is unstable."

He told shareholders at RFG's annual general meeting on Thursday that reducing debt and improving customer service were top priorities.

"It is likely that we will need to sell assets, recapitalize the balance sheet and reduce our cost base by a large amount," he said.

Mr George said RFG found itself in its current woes due to a number of "interrelated challenges", starting with a rapid growth period and numerous acquisitions from 2012 to 2016, followed by the exit of senior staff.

"The journey back to becoming a more nimble, customer-focused organization has begun, however, much work remains to be done," Mr George said.

RFG's debts stood at $ 258.9 million on June 30 and, under a deal with its lenders reached in August, all proceeds from assets sales will have to go down to pay that debt.

The agreement with Westpac and National Australia Bank brought forward the date by which it should refinance its debt from January and December 2020 to October 2019.

RFG group CEO Richard Hinson said the company was trying to help franchisees with lower fees, lower prices on the goods they bought from head office, and other measures.

RFG had consolidated its wholesale coffee business under the brand Di Bella Coffee, which was the future of the company's business, Mr George said. Mr George said RFG could not give profit guidance.

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