Oliver’s share price has shown shoots of recovery after the whole food cafe chain announced it had stemmed its earnings bleed and was poised to steer into positive territory over the next year.
The company said it expects its fourth quarter earnings to break even as it emerges from a tumultuous six month period featuring mounting losses, profit downgrades, a plummeting share price and an almost complete upheaval of the board and executive team.
Oliver’s announced to the ASX on Wednesday that it will post an earnings loss for the 2019 financial year of around $5.3 million, “all of which was incurred prior to the actions and initiatives of its current board and the senior management team”.
The company’s share price lifted from 2.2 cents to 4.2 cents after it emerged from a trading pause, and was 3.8 cents at 1540 AEST, still well below its peak of 39 cents following its float in mid-2017.
Oliver’s chairman Nicolas Dower said a renewed fiscal focus – and the return of founder and chief executive Jason Gunn – would help return earnings into the black in FY20.
“Although a 2019 financial year loss of $5.3 million is hardly a good result, it is better than it would have been under the old board and management,” Mr Dower said.
“With most of the major cost cutting and savings now being banked, our total attention is now focused on improved store performance and better margins.”
Oliver’s Real Foods sells health-focused fast food at more than 20 outlets, including at its flagship cafe at the Wyong service centre on the Pacific Highway.
It has been a rocky journey for the company since its $15 million capital raising and public listing in 2017.
The latest management upheaval began when chief financial officer Alan Lee resigned in December after the company performed poorly throughout 2018.
Oliver’s then downgraded its FY19 guidance in January to a $4 million earnings loss, $3.5 million of which had already been reported for the six months to December 2018.
The resignation of chairman Mark Richardson followed in February – two days before the company announced its statutory net loss had widened from $127,000 to $11.5 million for the six months to December 31.
Two non-executive directors and company secretary Emma Lawler stepped down, and Mr Gunn returned to the board along with his wife, Amanda.
The next week chief executive Greg Madigan left 10 months after he signed on, with Mr Gunn later resuming the role he left in mid-2018.
In a letter to shareholders in March, Oliver’s said its performance since listing had been “unacceptable”.
But on Wednesday the company said it was delighted to inform stakeholders its remedial actions, including a return to “the original culture” and closing four unprofitable stores, has had the desired impact.