Food and beverage investor Veritas Investments has slashed its full year profit guidance 19 per cent, blaming a slow turnaround in its gourmet supermarket chain Nosh and tighter drink-driving legislation weighing on its Better Bar Company.
The Auckland based company, which also owns the Mad Butcher franchise, now expects profit to be $4.3 million in the 12 months ending June 30, down from the $5.3 million it forecast in February, which itself was a downgrade from its November expectation of between $5.3 million and $5.8 million, and unchanged from the $4.3 million it reported last year.
Veritas has been on the acquisition trail since its formation from a shell company in December 2011. It bought the Mad Butcher chain in May 2013, half of the meat patty supplier Kiwi Pacific Foods in December 2013, and the Nosh gourmet-supermarket chain in September. It bought the Better Bar pub chain last November for $31.2 million in cash and shares.
The company blamed its two most recent acquisitions, Nosh and BBC, for the profit downgrade. Nosh is in the middle of a business turnaround, which Veritas said was “progressing well, although is behind schedule” and as a result will record a loss this year, with a break even position pushed to the second quarter of the 2016 financial year.
Its BBC unit was suffering from tighter drink-driving legislation, Veritas said. It expected lower alcohol offerings and improved food would counter the downturn.
Its Kiwi Pacific Food unit had traded strongly and was above targets. The Mad Butcher business earnings were in line with expectations, with its Mini Mad Butcher pop up store in Mosgiel a success, Veritas said.
There were currently four stores for sale, waiting for new franchisees to purchase them.
The Massey, Glenfield, Rotorua and Kapiti Mad Butcher stores have all been placed into liquidation so far this year, and all but Rotorua have been taken back into Veritas ownership.
Last month Veritas was forced to defend the liquidations, saying it was “simply a coincidence of timing”.
There are currently 40 Mad Butcher stores across New Zealand, of which 35 are operated by franchisees, according to the Veritas website.
Veritas shares dropped 3.8 per cent in opening trading to 77 cents and have declined 36 per cent since the start of the year.
BusinessDesk
