Veritas Investments, the food and beverages retailer, says it had no success selling Mad Butcher outlets currently for sale and that the cut-price meat chain continues to face a “challenging” environment.
The concept behind Mad Butcher is that combined clout makes it possible to purchase product in bulk and offer more competitive pricing than independent butcher shops.
Tensions between the founder and brand ambassador Sir Peter Leitch, CEO Michael Morton and Veritas Investments, the NZX-listed company that acquired the chain in 2013 versus the group of former franchisees had been simmering for some time.
Allegations abounded from these franchisees from the 39-store network that an increase in fees collected by the franchisor from meat suppliers had left them financially distressed. This was exacerbated by fierce competition with other meat retailers.
Despite this challenging environment, the cut-price meat chain remains on track to meet profit guidance issued in June, in which it said annual profitability was expected to rise 28 per cent in the 2016 financial year – equivalent to its earlier expectation of results for the 2015 year.
The Auckland-based company said then that it expected net profit of between $5.3 million and $5.5 million in the year ending June 30, 2016, up from the $4.3 million anticipated in 2015.
In an update to the NZX on first quarter trading in the 2016 financial year, chairman, Tim Cook, said Veritas was “exploring options” for its subsidiary Kiwi Pacific Foods, a supplier of beef patties for major client Burger King, through a joint venture with a subsidiary of the multi-national fast food provider, Antares Restaurant Group.
Earlier this year, Antares sought to terminate its contract with Kiwi Pacific, a decision that Kiwi Pacific challenged and lost at arbitration and is now seeking to appeal, with the supply agreement scheduled to end in April next year.
Veritas said its Better Bar company, which owns bars in Auckland and Hamilton, was trading to expectations in Auckland but “the Hamilton bars continue to underperform and the board are proactively working on a number of potential solutions to produce a positive outcome”.
The company’s Nosh chain of up-market food stores “remains on track to be profitable in the next quarter”.
Veritas was now seeking to appoint a CEO and had made an interim appointment of John Hames as chief financial officer following the resignation of Adrienne Roberts in October after a year and a half in the role. Hames has held financial control and accounting roles at Westpac Banking Corp, Two Degrees Mobile, and Fletcher Building.
Veritas shares were unchanged at 43 cents, having fallen 66 per cent this year.
