July 26, 2010Allied Brands vows to get business back on track after announcing significant losses and write downs which have seen the group’s underlying profit forecast drop from $5 million to breakeven.
Following discussion with the Board and its auditors, Allied Brands has provided for a write down in carrying values in both the Cookie Man and Villa and Hut businesses.
According to a statement issued to ASX, the company has also provided further amounts for the closure of 14 stores, including the write down of fixtures and fittings of $3.5 million, the closure of the Awesome Entertainment business and the cancellation of Area Development contracts of $4 million after a review of its operation.
“These changes will increase the write downs to between $30-$32 million, this is well above the $13-$15 million announced in June and reflects the further changes made after completion of an operational and strategic review of the company,” Allied says in a company statement.
“The company also wishes to advise that due to the failure to settle contracts for the sales of the Bay Swiss franchised stores coupled with significantly increased trading losses in these stores and increases in bad debt provisions means that the underlying profit for the full year will be roughly breakeven.”
This is significantly down on the previously reported underlying profit of $5 million for 2010.
In a bid to return to profitability, Allied says it has cut in excess of $3 million in overheads and is implementing a new streamlined business model.
“This coupled with rationalisation of area developer’s within the brands will save the company operational costs in the vicinity of $4.5 million per annum.”
BASKIN ROBBINS GROWTH
As a follow-up to Friday’s (July 23) announcement, Allied today assured the Baskin Robbins group has continued to have store-on-store sales growth of 7.2 percent over the last year.
Baskin Robbins is expected to provide revenue of $13 million to the Allied Brands Group.
“Allied will be opening 12 stores over the first half of this financial year and have an expectation of 20 stores in the coming financial year in hard serve ice cream which will meet our development obligations under the agreement,” the company says.
Allied Brands incorporates the Baskin Robbins, Villa and Hut, Cookie Man and Kenny's Cardiology businesses.
