Retail Food Group (ASX:RFG) shares have rebounded from recent lows, gaining ground amid a series of strategic initiatives, but face a key resistance level. The recent uptick contrasts with a challenging year for the company.
The company’s shares closed today at A$1.46, a 1.39% increase on the session, and are up 15.42% over the past month. Despite this positive momentum, the stock remains down 43% year-to-date. The share price tested resistance at A$1.48 during the session, a level it will need to decisively break to sustain its upward trajectory.
RFG’s recent performance is underpinned by several key developments. In February, the company secured an exclusive license to bring Firehouse Subs to Australia, planning to open 165 restaurants over the next decade, starting in South East Queensland by late 2025. This move aims to tap into Australia’s A$1.7 billion sandwich market. Additionally, in November 2024, RFG acquired Beefy’s Pies for A$10 million, expecting it to contribute approximately A$18 million in revenue and A$2.5 million in EBITDA for FY24.
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The company’s financial results for the first half of FY25 showed positive signs, with underlying revenue increasing by 24.7% to A$66.5 million and underlying EBITDA rising by 4.2% to A$16.0 million. Statutory net profit after tax surged by 73.8% to A$7.3 million, driven by growth in domestic network sales from brands like Gloria Jean’s, Donut King, Brumby’s, and Beefy’s.
However, RFG recently announced the immediate resignation of CEO Matt Marshall on September 12th. Chairman Peter George has assumed the role of Executive Chairman while a global search for a new CEO with franchise experience is underway. This leadership transition introduces a degree of uncertainty.
The company’s price-to-sales (P/S) ratio of 0.7x remains below the Australian hospitality industry average, where P/S ratios above 1.7x are common. This suggests the market remains cautious about RFG’s long-term prospects. A $47.4 million capital raising in March 2023, intended to support growth, resulted in a 7% share price drop, reflecting market apprehension about dilution.
RFG’s shares have shown resilience, bouncing off lows and approaching a key resistance level. The company’s strategic initiatives are showing some promise, but leadership uncertainty and market valuation concerns persist, creating a mixed outlook for the stock.
