Retail Food Group earlier this week put out a statement to the ASX updating the market on its debt refinancing and its expected first-half results.

The company said it had refinanced its debt with a new $41.2 million facility with Washington H. Soul Pattinson & Company Limited (ASX: SOL), with the new facility providing another $7.5 million of headroom to finance its growth plans. The new debt was at an interest rate of 9%.

Difficult start to the year

The company also said that it expected the first half underlying EBITDA to come in at $9 to $10 million, down from $16 million for the first half in the previous year.

This was due to challenging trading conditions during the second quarter, a lack of certain one-offs that would not be repeated during this period, and a lower-than-anticipated contribution from newer Beefy's outlets.

The company added:

Earnings were also impacted by franchisee support initiatives relating to the above, including maintenance of wholesale coffee prices despite higher raw material costs, particularly green coffee beans.

Retail Food Group also explored a potential sale of the Brumby's Bakery business during the half, but decided to retain the business.

Executive Chairman Peter George said:

While Brumby's attracted considerable interest from multiple parties, we were ultimately not convinced that the options available would be in the best interests of shareholders, franchisees, or team members at this time. Brumby's remains profitable and is an important contributor to RFG's performance, with this decision providing certainty for all brand stakeholders.

In the earnings guidance, the company said cost initiatives were under, which were expected to deliver $1.2 to $1.8 million in savings this financial year and increase to $5 to $7 million during FY27.

The company added:

As a result of the above, RFG expects earnings to improve in 2H26 vs 1H26 and is guiding to FY26 Underlying EBITDA of $20.0-24.0m.  

Analysts see plenty of upside

The Shaw team, in a research note to clients, said the company's valuation going forward was likely to be driven by how well it executes its growth tactics, both organically and via new store openings.

They added:

RFG has identified initiatives that can grow the business organically such as, implementation of new systems, conversion of legacy branded outlets into focus branded outlets, engagement of multi-site operators and expansion of company-owned stores. RFG management has indicated that it can leverage its systems, knowledge, network and overheads to bolt-on acquisition of branded food/beverage outlets. Value-accretive acquisitions could be a key valuation driver for RFG.

Shaw and Partners has a price target of $2 on the shares compared with $1.28 currently. If achieved, this would deliver a 57% return to shareholders.

Retail Food Group was valued at $80.2 million at the close of trade on Wednesday.

The post Looking for better than 50% upside? This fast-food company could be worth a look appeared first on The Motley Fool Australia.

The company owns, operates, and franchises restaurants primarily located in Australia. 

Familiar names for consumers include Donut King, Michel's Patisserie, Brumby's Bakery, Gloria Jean's Coffees, Pizza Capers, and Crust Gourmet Pizza.

A year ago, shares were trading at roughly $2.64 each. 

Yesterday, shares closed at $1.32 each. 

Many investors keep a close eye on stocks that are moving upward. But it appears valuations now place this ASX consumer discretionary stock as a value buy. 

What has pushed the price lower?

The company reported mixed results in key financial indicators for the previous financial year. 

For FY25, the company reported statutory net profit after tax (NPAT) of $14.9 million, down 357.3% on pcp. 

This was attributed primarily due to non-cash impairments related to Brumby's Bakery. It was also due to restructuring costs to refocus operations on higher-growth brands like Beefy's Pies and Firehouse Subs.

Meanwhile, underlying revenue was up 13.6% on pcp for this consumer discretionary company. 

Looking forward, RFG is shifting its growth strategy to focus on Beefy's Pies and the newly introduced Firehouse Subs, backed by a 20-year agreement with Restaurant Brands International to open 165 outlets in Australia, starting mid-FY26.

Finally, less than a month ago, the company announced the resignation of Chief Executive Officer Matt Marshall. 

He is replaced by non-executive Chairman Peter George as Executive Chairman while the Board conducts a global search for a new CEO.

Bell Potter's view

Following the FY25 results, broker Bell Potter released updated guidance on this consumer discretionary stock. 

Bell Potter reduced its price target by 28% to $2.60 per share due to earnings downgrades and a lowered target P/E multiple. 

Despite this, it still sees the valuation as relatively undemanding, supported by growth in core brands, a return to QSR growth, the successful Beefy's acquisition, and long-term potential in the FHS opportunity, albeit with near-term risks.

With Bell Potter's updated price target of $2.60 per share, this still indicates an impressive upside of 96.97%. 

It's worth noting the broker has lowered its NPAT forecasts for RFG by 4.3% in FY26, 11.4% in FY27, and 13.4% in FY28.

Foolish Takeaway

RFG's earnings are expected to decline in the short term, mainly due to upfront investment costs for launching Firehouse Subs and ongoing restructuring (including a potential Brumby's divestment). 

As a result, investor sentiment may be cautious, and the share price for this consumer discretionary stock could remain under pressure until the benefits of the new strategy begin to show.

The post Has this struggling consumer discretionary stock fallen into buy-low territory? appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Genetic Signatures Ltd (ASX: GSS)

The Genetic Signatures share price is down 10% to 65.5 cents. This morning, this global molecular diagnostics company announced that it is concluding the development of the EasyScreen Essentials Respiratory Detection Kit for the US market. The company made the decision based on an internal assessment of the commercial landscape. CEO Neil Gunn said: "While it is disappointing to conclude the development of a key product at this late stage, we are very mindful that any investment we make in new products must continue to be aligned with a compelling commercial opportunity."

Retail Food Group Ltd (ASX: RFG)

The Retail Food Group share price is down almost 3% to 6.8 cents. The quick service restaurant operator released an investor update this morning and revealed that retailing macroeconomic conditions remain weak. As a result, sales are flat year to date in FY 2024. The good news is that management expects "improvement in market conditions in FY25 as tax cuts, growth in real wages and population, and the potential for rate cuts are expected to allow some consumers to ditch frugality."

Smartpay Holdings Ltd (ASX: SMP)

The Smartpay Holdings share price is down 2.5% to $1.19. This follows the release of the New Zealand based payments company's full year results. Smartpay reported a 24% increase in revenue to NZ$96.5 million and a 29% jump in normalised profit before tax to NZ$9.8 million. It seems that some investors were expecting an even stronger performance from the company in FY 2024.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 17% to 23.2 cents. Investors have been hitting the sell button today after the gold miner released an update on its guidance for FY 2024. According to the release, the company's Simberi's gold operation has underperformed materially during the fourth quarter. This has been caused by the important Sorowar ore zone not being accessible until the next quarter, which has resulted in lower ore grades. As a result, full year production and cost guidance for FY 2024 is revised to 52,000 to 56,000 ounces (previously 60,000 to 70,000 ounces) at an all-In sustaining cost of A$3,700 to A$3,900 per ounce (previously A$3,200 to A$3,400).

The post Why Genetic Signatures, Retail Food Group, Smartpay, and St Barbara shares are tumbling today appeared first on The Motley Fool Australia.

The idea is that when household budgets tighten up, consumers will cut spending in expensive restaurants and resort to the low-cost options for relief from cooking.

Perhaps this is why after 13 interest rate hikes two of the best known quick-service food retail shares on the ASX rocketed last month.

And what's more, Glenmore portfolio manager Robert Gregory is backing them for further gains:

These food retail shares still going for 'very low earnings multiples'

Retail Food Group Ltd (ASX: RFG) shares gained a huge 27% last month, with Gregory attributed to corporate manoeuvring.

"Retail Food Group announced the acquisition of Queensland based Beefy's Pies, a vertically integrated café business with 9 retail outlets, for a cost of $10 million — including $2.5 million in potential earn-out payments."

The takeover was funded by cash and worked out to be an enterprise value to EBITDA multiple of just 4, he said in his memo to clients.

The company is best known for franchises like Gloria Jean's Coffee, Donut King, Michel's Patisserie, and Crust Pizza.

Also in November, RFG management updated investors at its annual general meeting.

"Whilst the company did not provide specific earnings guidance, it did state group same store sales for the first 17 weeks were up +1.8% vs pcp, which was broadly in line with expectations."

Despite the massive rise in recent weeks, Gregory pointed out RFG shares are still dirt cheap for those willing to buy now.

"The stock trades on very low earnings multiples with the stock price performance in the month also reflecting the cheap starting point for its valuation."

Killing it with chicken

Kentucky Fried Chicken licensee Collins Foods Ltd (ASX: CKF) also saw its shares surge in November, to eventually gain 24%.

Gregory pointed out that investors were excited about how the first half results were 10% ahead of expectations.

"EBITDA for the half was $109.9 million, up +17% vs pcp, with KFC Europe, KFC Australia and, to a lesser extent, Taco Bell all performing better than expected. 

"The result once again showed the strength of the KFC brand, despite the well documented challenging trading conditions for consumers."

He added that operating cash flow was "strong", which resulted in a reduction of "debt and interest expense". 

The second half is also off to a cracking start.

"CKF said the first six weeks of 2H24 had started positively with like-for-like sales of +2.9% KFC Australia, +8.1% KFC Netherlands, +8.6% KFC Germany, and +8.7% Taco Bell."

The post Pies and chicken: 2 ASX food retail shares rocketing from hungry Aussies appeared first on The Motley Fool Australia.

Just have a chat to any small business owner, or a mortgage holder.

The Reserve Bank of Australia has a job to do in trying to quell rampant inflation, but doing so with 12 interest rate hikes has crushed the morale of consumers and businesses.

Instinctively, the first sector to get crushed in such a situation would be consumer discretionary.

However, there are some retailers that are set to do better than others, and this is how Glenmore portfolio manager Robert Gregory is finding some gems.

Perhaps with the view that the situation will only get better as interest rates stabilise, here are three consumer shares that he's bullish on:

'Impressive result' with increasing margins

Notwithstanding the macroeconomic pressures, furniture merchant Nick Scali Limited (ASX: NCK) saw its shares rise 16.9% last month.

Gregory noted the company's financial results were "strong".

"Net profit after tax (NPAT) of $101.5 million [was] up +26% vs pcp and ~5% ahead of market expectations," he said in a memo to clients.

"Despite the well documented headwinds for consumer spending, NCK produced an impressive result, with gross margin increasing by 250 basis points to 63.5%."

Looking into the future, growth is definitely on Nick Scali's agenda.

"Nick Scali currently has 64 Nick Scali and 43 Plush stores, with long term targets of at least 86 Nick Scali and 90 to 100 Plush stores."

Excitement at fever pitch for this retail giant

Premier Investments Limited (ASX: PMV) shares also went gangbusters in August, soaring 16.1%.

The big news for the retail conglomerate was that it would conduct a study into whether its Peter Alexander, Smiggle, and apparel brands would be spun off into separate entities.

"The announcement created excitement amongst investors given that a breakup of the various Premier Investments businesses in some way may lead to a higher market rating than is currently being attributed to the group as a conglomerate."

Gregory felt like the short-term hype was perhaps overdone, as the complexities of such a break-up would mean "any final decision is likely to take some time". 

More information is expected at the end of the month when the company formally reports its annual result.

US expansion could put a rocket under these shares

In contrast to the other two shares, Retail Food Group Ltd (ASX: RFG) dipped 7.4% in a miserable August.

Gregory felt its 2023 financial results were "broadly in line with expectations".

"Underlying EBITDA was $26 million, which was at the bottom end of recently revised guidance of $26 to $29 million. 

"Divisionally, domestic coffee and Café/Bakery produced strong results, whilst QSR and international franchising produced softer results."

The trading so far this financial year has been "solid" with revenue higher on a same-store basis.

Its expansion plans are what's making Greogry bullish on the owner of ubiquitous food brands such as Michel's Patisserie, Gloria Jeans, Crust Pizza, and Donut King.

"RFG is expanding its US business, where it plans to move from 47 to ~100 stores (over 3 years) via large scale multi-site operators, which should assist earnings growth, albeit FY24 will see upfront costs."

The post What slowdown? 3 ASX consumer shares ready to rocket appeared first on The Motley Fool Australia.

That means that, unfortunately, the worst economic times are still ahead of Australia, which has copped 12 rate hikes over the last 14 months.

The good news, though, is that there are ASX shares out there going for cheap amid the current pessimism.

By buying into these, the idea is that as the economic cycle turns back to recovery, earnings for these companies will be lifted from increased demand.

Let's check out a couple of buy tips based on that strategy:

Trading very cheap while operating famous brands 

Retail Food Group Ltd (ASX: RFG), which operates ubiquitous food franchises such as Michel's Patisserie and Gloria Jeans Coffee, has seen its share price sink 36.7% so far this year.

In a memo to clients, Glenmore Asset Management portfolio manager Robert Gregory noted how its update to the market last month did it no favours.

"RFG issued a much awaited trading update stating that whilst FY23 earnings guidance for EBITDA to be in the range of $26 million to $29 million would be maintained, it is now likely to fall at the lower end — previous guidance was the upper end."

The company cited "deterioration in trading conditions" for the retail sector after the steep interest rate rises and "cost of living pressures on the Australian consumer". 

"Year-to-date domestic network sales grew +8.5% in FY23 vs pcp, however in the second half, domestic network sales growth moderated to +2.2% in the 21-week period."

However, the depressed conditions simply mean Retail Food Group is closer to bouncing back, as far as Gregory is concerned.

"Whilst the next 6 to 12 months of trading will continue to be challenging, RFG trades on a very low PE multiple of ~7x, and holds an attractive portfolio of brands across [the] food and beverage sector."

Contract wins galore

Meanwhile, the analysts at Celeste Funds Management took notice of how mining contractor NRW Holdings Limited (ASX: NWH) is seeing its work pick up last month.

"NRW Holdings continued a run of new work award announcements, with a letter of intent signed with Allkem Ltd (ASX: AKE) to provide mining services work at the Mt Cattlin lithium mine in Western Australia."

The 36-month, $332 million contract gave hope to investors that its previous issues are starting to disappear.

"Investors gained increased comfort that the delays in new contract awards — highlighted by management at the 1H23 result in February — are now being resolved and the enormous pipeline of work across the industry can begin working towards being realised."

As the resources industry picks up from an improving global economy, including major customer China, NRW shares have much upside potential from here.

"We remain positive on NRW Holdings and expect further new contract wins to be announced over the months ahead."

The post 'Attractive portfolio': 2 ASX shares to buy while the economy is down appeared first on The Motley Fool Australia.

Most Australians would wait for a sale or at least negotiate for a discount.

So why are so many investors afraid of buying ASX shares that have fallen in recent times?

If the long-term business outlook remains positive, a short-term dip in the stock price merely presents a buying opportunity. Think of it as a Boxing Day sale for stocks.

To demonstrate, here are two ASX shares that were hammered in March that Glenmore Australian Equities Fund is happy to buy and hold:

'Solid earnings outlook across its portfolio of brands'

Food retail franchisor Retail Food Group Ltd (ASX: RFG) is the business behind ubiquitous brands like Gloria Jean's, Michel's Patisserie and Donut King.

Glenmore portfolio manager Robert Gregory has been a fan of the stock for a while, and a hair-raising 25.3% drop in March isn't about to put him off.

He attributed a $25 million capital raising and a new $20 million debt facility announced during the month as the cause of its stock price woes.

"There was no specific acquisition or initiative to increase earnings for the equity funds raised," Gregory said in a memo to clients.

"[This] undoubtedly disappointed the market, with RFG stating the funds would be used to 'reset and strengthen the company's balance sheet and provide capital to pursue core business and inorganic growth opportunities'."

The big drop in stock price just makes Retail Food Group shares even more of a bargain, as far as Gregory is concerned.

"Despite the 15% earnings per share dilution from the raising, with the stock having fallen materially in the month, RFG trades on an FY23 PE multiple of 9x, and has a solid earnings outlook across its portfolio of brands."

Pick up this bargain before it explodes

US investment manager GQG Partners Inc (ASX: GQG) saw its share price fall 12.1% over March, due to a revelation that its fund-under-management dropped 1.3%.

This is just a short-term hiccup, according to Gregory.

"Whilst the investment performance of GQG's funds underperformed in the first quarter of 2023, performance over longer time frames is still well ahead of benchmark," he said.

"Positively, net inflows for the first two months of 2023 were US$3.0  billion, a very strong result."

Similar to Retail Food Group, Gregory is convinced GQG shares are an absolute bargain, but with the bonus of a fat dividend.

"GQG continues to look attractively priced, trading on an FY23 PE multiple of ~11x and a dividend yield of 8.5%."

Even with the March drop, the GQG share price is up 6.5% year to date.

The post 'Attractively priced': 2 ASX shares perfect for bargain hunters appeared first on The Motley Fool Australia.

This has been especially applicable the past year as volatility ruled markets. And experts — both bulls and bears — unanimously agree that this will also be the case in 2023.

In such times it's critical to keep focused on the long-term prospects of a company.

To demonstrate, Glenmore Asset Management portfolio manager Robert Gregory named one stock that went gangbusters in February and another that had a shocker — but explained why he's happy to be invested in both.

Demand-supply balance seems 'very favourable'

Car dealership network Eagers Automotive Ltd (ASX: APE) saw its shares soar 19.9% last month.

"Eagers delivered a solid full-year result, with underlying pre-tax profit of $405 million, up +1% vs prior comparable period, which itself was a very strong result," Gregory said in a memo to clients.

"FY22 dividend was 71 cents per share, up 14%."

Despite the boom result and market reaction, Gregory feels like there's plenty left in the tank for the business.

"Eagers has targeted an uplift in revenue of ~$1 billion in FY23, with ~$400 million from acquisitions made in 2022, ~$450 million from BYD (Chinese electric vehicle manufacturer) deliveries and the balance from organic growth projects."

The outlook for the retail car market looks positive for Eagers shares.

"The demand/supply balance in the new vehicle market continues to be very favourable, whilst Eagers' order book continues to grow, driven by orders well in excess of deliveries."

Many of Gregory's peers are also bullish on the stock. Ten out 16 analysts currently covering Eagers reckon it's a buy, according to CMC Markets.

Donut King leading the way

Retail Food Group Ltd (ASX: RFG) is the franchisor for many retail food brands ubiquitous in Australian shopping centres, such as Gloria Jean's Coffee, Donut King, Michel's Patisserie, and Crust Pizza.

Unfortunately for the group, the stock price plunged 13.3% in February.

That's despite Gregory's assessment that it had "delivered a strong 1H23 result", with earnings up 47%.

"All brand systems across Retail Food Group's portfolio reported strong same-store sales growth, with Donut King (+41% growth) a particular standout," he said.

"Retail Food Group's international division also performed well, with EBITDA of $2.0 million, up +39%."

The portfolio manager was glad that RFG confirmed its previous forecast for the full year.

"FY23 profit guidance was reiterated, with EBITDA expected to fall within the upper end of $26 million to $29 million."

The post 'Very favourable': 2 ASX shares Glenmore is riding to the top appeared first on The Motley Fool Australia.

Four ASX shares that have failed to climb with the market today are listed below. Here's why they are dropping:

Ampol Ltd (ASX: ALD)

The Ampol share price is down over 5% to $31.22. The catalyst for this has been the fuel retailer's shares going ex-dividend this morning for its fully franked $1.55 per share final dividend for FY 2022. Eligible shareholders can now look forward to receiving this dividend at the end of the month on 30 March.

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura share price is down 9% to 55.5 cents. This appears to have been driven by comments out of Tesla at its investor day. The electric vehicle giant revealed that it plans to drop the use of rare earths in its future electric vehicle models due to health and environmental risks that come with mining the critical minerals.

GQG Partners Inc (ASX: GQG)

The GQG share price is down 3% to $1.44. This may have been caused by reports that GQG is investing heavily in the Adani empire. According to the AFR, the company has poured $2.8 billion in four Adani companies. It believes an activist short seller attack has created significant value for investors.

Retail Food Group Ltd (ASX: RFG)

The Retail Food share price is down 7% to 7.9 cents. This morning, this embattled quick service restaurant operator announced firm commitments to raise $24.9 million via a share placement to sophisticated and institutional investors. These funds will be raised at 8 cents per share, with the proceeds used to reset its balance sheet and support growth opportunities.

The post Why Ampol, Arafura, GQG, and Retail Food shares are dropping today appeared first on The Motley Fool Australia.

Retail Food Group Ltd (ASX: RFG) is the franchisor for well-known brands like Donut King, Michel's Patisserie and Gloria Jeans.

Six years ago, the share price was flying high around the $7 mark. But then it ran into legal and regulatory problems from consumer watchdog Australian Competition and Consumer Commission over its treatment of some franchisees.

By March 2020, when stocks crashed during the first wave of COVID-19, Retail Food shares were virtually worthless, going for around 3 cents.

It was still sitting at 5 cents last November. But since then it has pretty much doubled, to close Tuesday at 9.6 cents.

'Positive earnings outlook' looking good for stock price

Glenmore Asset portfolio manager Robert Gregory, who held the stock last year in anticipation of this boom, knows exactly what happened.

"In our view, this was driven by growing investor awareness of Retail Food Group's cheap valuation, following the announcement on 23 December 2022, that the ACCC investigation into misconduct by previous RFG management had been finalised," he said in a memo to clients.

The Retail Food share price remarkably gained 21.2% over December, then another 31.3% in January.

Despite its meteoric rise, Gregory is holding on for further gains.

"Whilst the stock is no longer nearly as cheap as it was before the ACCC announcement, we met with RFG management during the month, and continue to see a positive earnings outlook for the business."

Gregory's optimistic forecast is based on Retail Food's business plans like overseas expansion of Gloria Jeans and growing the number of franchisees for the Donut King, Crust and Gloria Jeans drive-through brands in particular.

"RFG currently has ~700 franchisees," he said.

"However, with the ACCC investigation now behind it, we believe the company is well positioned to grow this key metric which should be supportive for earnings going forward."

RFG is headquartered on the Gold Coast and also runs franchise networks for Crust Pizza, Brumby's Bakeries and Pizza Capers.

The post This ASX share's doubled in 3 months. Expert says it's not too late to buy! appeared first on The Motley Fool Australia.

Why wait when there are already some stocks that fit that bill exactly?

Glenmore Asset Management portfolio manager Robert Gregory revealed two such ASX shares in a memo to clients this week.

Both his examples soared in value over December, but Gregory is convinced that the party has only just started.

Back from the wilderness

Most investors who have held Retail Food Group Ltd (ASX: RFG) in the past would have likely long expunged it from their portfolios.

The stock price, over the past five years, has lost an eye-watering 96% of its value.

The franchisor for brands like Donut King and Michel's Patisserie had been in deep trouble with legal and regulatory issues arising from its relationships with its franchisees.

But then in December, the bleeding suddenly stopped. The share price amazingly rose 21.2%.

"Late in the month, RFG announced the resolution to the long running investigation by the ACCC into misconduct by previous management," said Gregory.

"The outcome was that RFG must pay $8 million to franchisees that were the subject of the misconduct. In addition, RFG agreed to waive $1.8 million of debt to certain franchisees."

Gregory reckoned that the penalties were "broadly in line with investor expectations".

The case had been "a major headwind" for Retail Food with an uncertain timeframe for resolution. But Gregory's team long believed the outcome would not be as severe as how dramatic the decline in share price suggested.

"RFG had been trading on a FY23 PE of ~7x before this announcement," he said.

"With the ACCC investigation now behind it, we believe RFG is well positioned to grow earnings from multiple internal growth initiatives, as well as being better placed to attract new franchisees and commercial partners, which has been impacted by the shadow of the ACCC investigation."

The December stock price surge now has it trading at a P/E ratio of 10, but that's still dirt cheap, as far as Gregory is concerned.

"We continue to see [it] as attractive, given [the] quality of its earnings base and growth prospects."

Still 'cheap valuation' even after tripling stock price

Metallurgical coal producer Stanmore Resources Ltd (ASX: SMR) enjoyed an 8.1% rise last month.

There were no official announcements from the company to the ASX, but Gregory has a theory.

"The stock was likely assisted by the +21% rally in the benchmark hard coking coal price, as well as growing investor awareness of Stanmore Resources' material free cash flow generation and cheap valuation."

In November, the Glenmore team visited Stanmore's site in Queensland.

The trip assured them that the stock is worth holding onto, even after a phenomenal 235% return over the past 12 months.

"The assets acquired from BHP Group Ltd (ASX: BHP) were operating well, with clear scope to be expanded, albeit any material production increases are likely to be in the medium term."

The post 2 December winners ready to rocket further in 2023: expert appeared first on The Motley Fool Australia.

As we head into the afternoon, shares in the food and beverage company are trading 10.1% higher at 7.6 cents apiece. The performance is more impressive given the context of the broader market on Friday.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is 0.81% weaker than yesterday.

Messy past comes due

Since 2017, Retail Food Group has been shrouded in controversy and contempt. Explosive allegations were made regarding the company's dealings with franchisees following an investigation conducted by The Sydney Morning Herald.

At the time, it was alleged that Retail Food Group failed to provide adequate financial information for the stores being sold to franchisees — among other issues — leading to financial ruin, at times, for those that operated stores such as Michel's Patisserie, Donut King, and Brumby's.

Understandably, the market grew nervous about the situation, sending the Retail Food Group share price into the dirt. In the space of two years, the company's shares descended a crippling 98%.

The reports prompted the Australian Competition and Consumer Commission (ACCC) to commence proceedings against Retail Food Group. Fast forward to today and we have our verdict.

According to the release, Retail Food has agreed to settle with the ACCC. As part of the agreement, the company will pay approximately $8 million to the impacted franchisees. Additionally, the company will waive around $1.8 million worth of franchisee debts.

Retail Food pointed out that the proceeding would be dismissed without:

• making any admission to the allegations
• paying any pecuniary penalty; or
• being subject to any injunction, disclosure, or adverse publicity order

Path travelled by the Retail Food Group share price

It has been a bumpy old ride for Retail Food shares in 2022, swinging between 4 cents and 8 cents. Yet, today's gain takes the company's shares into the green for the year.

In fact, the food and beverage business has outperformed the ASX 200 by approximately 14%. A title that not too many ASX shares can claim to hold at the end of this challenging 12-month stint.

The post It's settled then: Why the Retail Food Group share price is prancing 10% today appeared first on The Motley Fool Australia.

Four ASX shares that have not let that hold them back today are listed below. Here's why they are rising:

AGL Energy Limited (ASX: AGL)

The AGL share price is up 1% to $8.23. Investors have been buying this energy company's shares despite there being no news out of it. However, given the market selloff today, safe haven assets like utilities could be in demand with investors.

Retail Food Group Ltd (ASX: RFG)

The Retail Food Group share price is up 10% to 7.6 cents. This morning, this embattled quick service restaurant operator revealed that it has settled its ACCC proceeding. The Donut King, Gloria Jean's, and Michel Patisserie's operator has agreed to pay $8 million to settle.

Starpharma Holdings Limited (ASX: SPL)

The Starpharma share price is up 1% to 52 cents. This follows news that the drug developer has received a $7.1 million research and development (R&D) tax incentive refund under the Australian Federal Government's R&D Tax Incentive scheme.

TPG Telecom Ltd (ASX: TPG)

The TPG share price is up 2% to $4.89. Investors have been buying this telco's shares following the release of a bullish broker note out of Morgans this morning. According to the note, the broker has upgraded TPG's shares to an add rating with a $5.50 price target. The broker said: "We think the bad news is now priced in and see value at current levels. We upgrade TPG to an Add recommendation (from Hold)." TPG's shares are still down 17% year to date.

The post Why AGL, Retail Food Group, Starpharma, and TPG shares are rising today appeared first on The Motley Fool Australia.

Collins St Value Fund portfolio manager Michael Goldberg, nominated it as his "out of the box idea" to buy shares in the conglomerate that owns Donut King, Michel's Patisserie, Gloria Jean's Coffees, Brumby's bakeries and Crust Pizza brands.

The trouble is, Retail Food Group Limited (ASX: RFG) stocks went for in excess of $7.50 in 2015 but now trade at 9 cents. That's a 98.8% loss for those poor shareholders.

"This is a company that, due to historical factors, has left a bad taste in the mouth of many investors," Goldberg posted on Livewire.

"Regulatory action being undertaken by the ACCC based on the historical treatment of franchisees and the closure of many shopping centres around the country throughout the COVID-19 pandemic haven't helped matters either."

Incredibly, the fund manager sees the share price at around 15 cents within the next 12 to 18 months. That would be a tidy 67% return.

There are 3 reasons for Goldberg's conviction:

New management improving technology and franchise relations

The 2 biggest problems that pummelled Retail Food's fortunes are now being reformed by a new executive team, according to Goldberg.

"Culture trumps strategy. For a long time, it was questionable if Retail Food Group were getting either right," he said.

"But under the relatively new leadership of Peter George, positive, tangible changes have been made."

The improvements include slimming down the store count from more than 2,500 in 2017 to now 850.

"This is important because the relentless growth pursued by the previous management teams saw far too many franchisees getting burned," said Goldberg.

"Growth needs to be measured, sustainable and done in a way where all stakeholders get a fair slice of the financial pie."

The current leadership also recognises the importance of technology to adapt to the modern world, especially during the COVID-19 pandemic.

"A classic example of this is the way in which Gloria Jeans pioneered drive-through coffee purchases at a time when cafes were under forced closure," said Goldberg. 

"This strategy saw same-store sales actually increase by nearly 20% — offsetting the declining figures from those cafes that weren't able to serve as many customers as usual due to social distancing requirements."

The stock is soooooo cheap right now

Mathematically, Retail Food shares are a bargain, according to Goldberg.

The stock was trading at 7 cents when he made his comments.

"Earnings of 1 cent per share can be cheaply bought based on the 7 cent share price (P/E of 7) and look very favourably priced against other broadly comparable companies such as Domino's Pizza Enterprises Ltd. (ASX: DMP) — 50x, Collins Foods Ltd (ASX: CKF) — 27x and, to an extent, Metcash Limited (ASX: MTS) — 15X."

The fund manager reckons from here that earnings per share can grow at 15% per annum. There is even the "potential" for an 8% grossed-up dividend yield within the next 12 months.

"An obvious catalyst for a re-rating for the stock if ever there was one!"

It can't get any worse

After such a horror half-decade, surely any further news can only be good news, argues Goldberg.

"After all, Australian's love of a good pizza or a doughnut hasn't changed over the last five years – it's the investors who need convincing!"

While the current management is defending the company against the regulatory action from the consumer watchdog, it has signalled its intent to reform.

"They have made a genuine commitment to right the wrongs of the past and it is my view that any news will be good news in terms of settlement figures/timing."

Once the legal proceedings are over, the executive can simply focus on growth, according to Goldberg.

"For some, this may be a difficult story to believe, particularly those who have been on the journey with RFG for some time," he said.

"But the key ingredient in successful value investing is 'being comfortable feeling uncomfortable'. After all, to earn what others don't you have to be prepared to invest where others won't!"

The post Down 99%, this ASX share could now be a bargain buy appeared first on The Motley Fool Australia.

He's the billionaire business partner of Warren Buffett, and vice Chairman of the company they run, Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) (I own shares, for the record).

Yep, he's kind of a big deal.

Not just because he's rich and well connected, though.

The man is smart.

I'm talking Mensa-smart.

Munger is a true polymath; a man who spends more time reading than almost anyone.

He also has a witty turn of phrase, and doesn't mince words.

Charlie is perhaps the man I'd least like to end up debating in a public forum, on any topic.

He's also eminently quotable. There are dozens of lines that, should you use them as investing guidelines, would almost certainly improve your results.

One of his best known is:

"I know I'll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn."

Why?

Maybe it makes us more humble.

Maybe it forces us to review our investing processes a little more carefully.

Maybe it helps our subconscious identify common traits of our losing stocks.

It's probably all three.

As well as being the Motley Fool's Chief Investment Officer in Australia, I run a couple of our investment services, including Motley Fool Share Advisor.

I'm pleased to say that, at the time of writing, our average return is showing the market a clean pair of heels.

Which is important for context, but not the point I want to make.

See, also at the time of writing, here's the return of some of my recommendations:

iSentia Group Ltd (ASX: ISD): -97.48%

Freedom Foods group Ltd (ASX: FNP): -92.62%

Retail Food Group Limited (ASX: RFG): -70%

Reject Shop Ltd (ASX: TRS): -67.14%

I could go on, but I think that's enough nose-rubbing for now, even for a bloke with a larger-than-average schnoz.

I hate those numbers.

They rankle, both professionally, and because I know our members followed that advice and lost money.

Don't tell my wife, but I feel worse about those losses than losses in our own portfolio.

They just downright suck.

They're examples of bad process, bad luck and just plain bad outcomes.

I make no excuses for them. I don't think all were in our control, but that doesn't pay the bills. The money is still lost.

So why don't I give up and go dig holes?

Because, thankfully, they're rare.

And because they're only a small portion of our overall scorecard result.

And, lastly, because we make sure we're diversified.

None of that is an excuse, by the way — I'm not trying to cover up a screw-up by saying 'look over there'.

But — and this is the unfortunate reality — they're going to happen.

If you want to avoid losers, stay in cash.

But good luck building a retirement nest egg that way.

No, if we want decent investment returns, we need to embrace the reality of risk.

There will be times when we will be wrong.

So how do we proceed?

Here's what we try to do at The Motley Fool.

First, we try to avoid stuff-ups.

Sometimes, I've just been plain wrong. For example, I can't blame anyone else for my Isentia mistake. I was just wrong and I have to learnt to accept that It happens.

Fewer of those, in future, is the aim.

But in other cases, we're playing a game of probabilities.

Every company has both growth potential and inherent risk.

The job of the investor, professional and amateur alike, is to find opportunities where we're being offered an outsized return, for the level of risk we're taking.

Or, as Charlie says:

"We look for a horse with one chance in two of winning and which pays you three to one. You're looking for a mispriced gamble. That's what investing is."

See, not a guaranteed winner (there is no such thing), but a bet where the return on offer is significantly greater than the risk.

If I could, I'd just repeat those last two sentences for the rest of this article.

Because, as an investor, if you can't internalise that, you're on a hiding to nothing.

You can't be right all the time.

And if it was possible, the guaranteed nature of the outcome would mean that your return would be almost zero (government bonds, anyone?).

So, while I hate those losses, I've learned to accept them.

For the record, my four largest winners at Share Advisor are +951%, +645%, +460% and +444%.

See the difference?

Now, of course I'd just take the winners and avoid the losers, if that were possible.

But it's not.

So, here's what I do:

I try to keep learning, refining my process as I go.

I make sure I'm diversified, so that one or two losers don't wreck my portfolio.

I remember that investing is a long game.

And — here's the tough love bit — if you only buy one, two or five of our recommendations, I can't help you.

We don't promise success on that scale. We can't. It's not possible, and such a promise would be illegal or at the very least deeply immoral.

I feel terrible about the people that lost money on Isentia.

But I also hope they made more money on other companies than they lost on that bad recommendation.

Statistically, that's likely — and more likely the longer they've been a member and the more of our recommendations they followed.

I don't blame you for being mad when you lose money. Especially on one of our recommendations.

No-one likes losing money.

But, as I said, it's happened before and it'll happen again.

It probably won't feel any better next time, either.

Hopefully, over time and over a diversified portfolio, the winners will outstrip the losers, in both number and size. That's been the experience at Motley Fool Share Advisor and in the vast bulk of our other services.

We have a gameplan that we think is a winner (and has done well for us so far). But just like in sport, you can't win the game with a single play.

You can be dirty about a missed tackle or a knock-on. A bad bounce or a missed shot. But that's not what determines success.

Nor is it decided in the first minute. Or first 5 minutes. Or first 60.

You've gotta play the whole game – the long game!

Fool on!

The post My biggest losers so far appeared first on The Motley Fool Australia.

Maintaining a profit despite COVID-19

Earlier today, Retail Food released its results for the first half of FY21.

Despite the impact of the COVID-19 pandemic on retail, Retail Food managed to maintain a profit for the first half.

The company recorded an underlying net profit after tax (NPAT) of $12.0 million. This was a 60% increase on the prior corresponding period (pcp). The result was underpinned by an underlying EBITDA of $14.4 million for the first half of FY21.

However, the true impact of the pandemic was seen in statutory NPAT which fell 72.2% to $3.89 million. In addition, total revenues for Retail Food fell 52.4% to $85.1 million for the first half.

Retail Food acknowledged that the company had received $4 million in Jobkeeper payments and did not declare an interim dividend.

Spotlight on Retail Food divisions

Retail Food noted strong performances for its domestic franchises, Brumby's Bakery and QSR Division (Crust/Pizza Capers).

For the first half, the company's Brumby's Bakery franchises reported an 11.7% increase in sales. In addition, its QSR Division saw sales grow by 6.7% largely due to non-contact meal delivery options.

 According to Retail Food, the sales growth partially offset its brands anchored to shopping centres. Overall, Retail Food saw total network sales for Donut King, Michel's Patisserie, and Gloria Jean's fall 13.2% to $244 million.

How has the share price responded?

Retail Food is Australia's largest multi-brand retail food franchise manager. The company is the owner of notable brands including Donut King, Michel's Patisserie, Gloria Jean's, Brumby's Bakery, Crust Gourmet Pizza, and Pizza Capers.

The company acknowledged that the COVID-19 pandemic presents ongoing challenges for the second half of FY21. However, Retail Food management remains optimistic about the return to less volatile trading conditions.

Retail Food also noted that Federal Court proceedings with the Australian Competition and Consumer Commission (ACCC) had begun. However, the company could not determine the full financial impact of the proceedings.

The post Why the Retail Food (ASX:RFG) share price is 5% higher appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they are dropping lower:

Mesoblast limited (ASX: MSB)

The Mesoblast share price was down 2% to $3.77 before being placed into a trading halt. Investors have been selling the biotech company's shares this week following the release of disappointing trial results. Mesoblast requested the trading halt earlier today pending the release of an announcement relating to a corporate update.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price has crashed 19.5% lower to 70.5 cents. This follows the completion of the institutional component of its equity raising. Pilbara has now raised a total of $180 million from institutional investors at a price of 36 cents per share. This represents a massive 59% discount to its last close price. The equity raising has been undertaken to fund the acquisition of the Altura Pilgangoora Lithium Project in Western Australia.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price has fallen 3.5% to $1.72. This follows the completion of a bookbuild which saw two major shareholders sell down their holdings. According to the release, the 54.68 million shares were sold for NZ$1.79 per share, which was higher than the floor price and a discount of 5.3% to its last close price.

Retail Food Group Limited (ASX: RFG)

The Retail Food Group share price is down a further 3.5% to 8.2 cents. Investors have been selling the food and beverage company's shares after the ACCC started proceedings in the Federal Court against it and five of its related entities. The corporate watchdog alleges that the company engaged in unconscionable conduct and made false or misleading representations in its dealings with franchisees.

The post Why Mesoblast, Pilbara Minerals, Pushpay, & Retail Food Group shares are dropping lower appeared first on The Motley Fool Australia.

Four shares that have fallen more than most today are listed below. Here's why they are dropping lower:

Althea Group Holdings Ltd (ASX: AGH)

The Althea share price is down 7% to 45.5 cents after completing a capital raising. The cannabis company has raised $6 million through an institutional placement at a 10.2% discount of 44 cents per share. It will now seek to raise a further $3 million via a share purchase plan. The proceeds will be used to accelerate its growth strategy.

Altium Limited (ASX: ALU)

The Altium share price has fallen 4% to $34.50. This follows its decision to offload its TASKING business for US$110 million on Monday in order to focus on its Altium 365 platform. This morning analysts at UBS retained their neutral rating and $36.00 price target on its shares following the news.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is down 3.5% to $21.39. Investors have been selling the iron ore producer's shares after the price of the steel making ingredient pulled back overnight. According to CommSec, the spot iron ore price dropped a sizeable 3.9% to US$154.50 a tonne. However, despite this decline, it is still up materially over the last few weeks.

Retail Food Group Limited (ASX: RFG)

The Retail Food Group share price has crashed 23% lower to 7 cents. The catalyst for this was news that the ACCC has commenced proceedings in the Federal Court against Retail Food Group and five of its related entities. The ACCC alleges the food and beverage franchise company engaged in unconscionable conduct and made false or misleading representations in its dealings with franchisees. This is in breach of the Australian Consumer Law.

The post Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower appeared first on The Motley Fool Australia.

Retail Food Group's share price is trading at 6.7 cents at the time of writing. In comparison, the broader All Ordinaries Index (ASX: XAO) is down 0.9% to 6,033 points.

Retail Food Group is a global food and beverage company that operates in the bakery/cafe division, coffee retail, and manufacturing and distribution operations.

Since it was established in 1989, Retail Food Group has grown to become Australia's largest multi-brand retail food and beverage franchise owner, servicing more than 1,150 locations.

Dairy Country sale

The company announced it was selling the business and assets of its subsidiary, Dairy Country, to Fonterra Brands for $19.23 million. This is expected to benefit Retail Food Group in a number of ways.

Net proceeds from the sale will be used to extinguish Dairy Country's working capital facility, and to make a further repayment of Retail Food Group's debt obligations. This will free up the company's cash flow and allow it to respond to the evolving retail landscape affected by COVID-19.

Settlement is expected by October 2020, pending net working capital adjustments and conditions such as a foreign investment review board approval.

What did management say?

Executive chair Peter George was optimistic about the sale re-aligning the group's core values and strategic interests. He said:

Dairy Country has represented a reliable past contributor to group earnings, however, is no longer considered an appropriate fit with RFG's strategic intent to focus its resources on the company's core retail food franchising and coffee businesses.

Mr George added the sale would give the company more flexibility within its balance sheet, saying:

The transaction facilitates the company's exit from foodservice and manufacturing pursuits, providing the group with a less complex business model that enables RFG to dedicate its resources towards driving positive outcomes for its franchisee community, and building value for its wholesale coffee business following its FY20 restructure.

About the Retail Food Group share price

The Retail Food Group share price has regained 146% since its March low of 2.6 cents. However, since the beginning of the calendar year, the Retail Food Group share price is trading 35% lower.

The post Why the Retail Food Group (ASX:RFG) share price is up 4% appeared first on The Motley Fool Australia.

According to The Guardian reporting, the ABS is looking at Aussie spending habits during the coronavirus pandemic.

The latest survey, conducted in mid-June, is about what Australians are going to spend money on once restrictions are loosened again.

The Guardian quoted ABS head of Household Surveys, Michelle Marquardt, talking about people's spending intentions: "a majority expected to increase their spending on recreational activities (74%), eating out (74%), private transport (73%), personal care (70%), childcare (66%) and public transport (55%)."

What does this mean for ASX shares?

Well it's good to see that people do plan to spend more money when restrictions allow. It is spending that makes the economy tick.

Recreational activities could mean a lot of different things. There are plenty of shares this could be applicable to such as: Ardent Leisure Group Ltd (ASX: ALG), Experience Co Ltd (ASX: EXP), Crown Resorts Ltd (ASX: CWN), Event Hospitality and Entertainment Ltd (ASX: EVT), Ingenia Communities Group (ASX: INA), Star Entertainment Group Ltd (ASX: SGR), Sealink Travel Group Ltd (ASX: SLK) and Village Roadshow Ltd (ASX: VRL).

Eating out would probably benefit the food shares listed on the ASX like Domino's Pizza Enterprises Ltd. (ASX: DMP), Collins Foods Ltd (ASX: CKF), Retail Food Group Limited (ASX: RFG) and Redcape Hotel Group Pty Ltd (ASX: RDC).

You'd think that private transport would be good for shares like Ampol Ltd (ASX: AMP), Viva Energy Group Ltd (ASX: VEA) and Waypoint REIT Ltd (ASX: WPR).

Increased spending on personal care would be good for shares like BWX Ltd (ASX: BWX), McPherson's Ltd (ASX: MCP), Sigma Healthcare Ltd (ASX: SIG) and Australian Pharmaceutical Industries Ltd (ASX: API).

It also looks like it would be good news for childcare related shares like G8 Education Ltd (ASX: GEM), Think Childcare Ltd (ASX: TNK) and Arena REIT No 1 (ASX: ARF).

What about travel?

People are also asked about their travel intentions. The ABS survey revealed that 55% were planning to go on a domestic holiday while less than a third were planning an international holiday.

Of the people planning to take a domestic holiday, 20% intended to go within the following month and another 68% planned to go within the following six months. Most people aren't thinking about an international holiday in the short-term. Of people thinking about an overseas holiday, 44% were thinking about doing it within six to 12 months and 31% were thinking about taking the holiday more than a year in the future.

Shares like Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT), Qantas Airways Limited (ASX: QAN) and Sydney Airport Holdings Pty Ltd (ASX: SYD) are obviously being disrupted by COVID-19 right now, but it'll be pleasing for them that people are thinking about taking domestic holidays.

Do any of these ASX shares look like buys?

I think there's a case for many of the shares hit by COVID-19 if you think about the long-term. Shares should be long-term investments. What happens over the next 12 months shouldn't change your long­-term thinking about a business too much, unless it could go bust. I'm not sure about travel shares at today's prices. The rising case numbers in Melbourne have hurt the prospect of the country being completely COVID-19 free this year, and may limit travel between Melbourne and the rest of the country for a bit longer.

I do believe that shares like BWX, McPherson's, API and Ingenia could be ones to watch over the next couple of years. I'm quite excited by the prospect of the continuing international earnings growth for BWX and McPherson's.

The post ABS reveals which industries (and ASX shares) may rebound hard after COVID-19 appeared first on The Motley Fool Australia.