Healthy fast food chain Oliver’s Real Food shares listed on the ASX on June 20 – five weeks later it has issued a profit warning – which must be something of a record.
The company told the ASX yesterday (https://oli.irmau.com/site/PDF/1120_0/FY2017FY2018EarningsGuidanceUpdate) that it will not meet its earnings, profit and revenue forecasts for 2016-17, but its 2017-18 forecast remains unchanged.
After a healthy June debut on the ASX raising $15 million, Oliver on Monday back-pedalled on its prospectus forecast and now expects a loss of $2.55 million for 2016-7, rather than the previously predicted $1.94 million loss.
Now it doesn’t sound much compared to larger companies in the ASX 200, but a downgrade is a downgrade, especially when it comes so soon after a successful float – and this raises questions about the accuracy of the prospectus and its forecast.
The net after tax result is expected to be a loss of approximately $3.18 million rather than the forecast loss of $2.385 million, on sales of $20.44 million compared to the forecast $21.09 million.
The shares closed down 15% at 28.5 cents – still well above the 20 cents issue price – but down on the peak price of 43 cents last month.
The company claims to be the world’s first fully organic’ fast food chain, but this hasn’t stopped it experiencing some old fashion problems such as lower net sales, delayed store openings, inventory adjustments and unexpected one-off costs all of which it says will impact its full-year results.
Oliver’s – whose 20 outlets along NSW and Victorian highways offer salads, cups of green beans, rice nuggets and freshly squeezed juices claims to have a 3% share of the $1 billion east coast highway dining market that is led by burger and chicken joints, McDonald’s, KFC and Hungry Jacks.
The company says sells gluten-free and organic fast food, and had previously a doubling in forecast revenue to around $42 billion in the 2017-18 financial year, and a net profit of $2.4 million.
On Monday, it said that 2017-18 guidance remained unchanged, with plans to add 40 outlets on highways in South Australia, Victoria, NSW and Queensland over the next four years.
