RFG Shareholders' 36% Loss: A Tale of Market Trends and Strategic Moves

Retail Food Group (ASX:RFG) shareholders have endured a 36% loss from investing in the stock five years ago, a stark reminder of the volatility and risks inherent in the retail sector. This article delves into the key factors contributing to RFG's performance and the role of market trends and management decisions in shaping its share price decline.



RFG's revenue and earnings growth have lagged behind its peers and industry averages over the past five years. While the company's revenue grew by 1.5% CAGR, its peers and the industry average grew by 3.5% and 4.5% CAGR, respectively. Similarly, RFG's earnings per share (EPS) grew by 0.5% CAGR, compared to 2.5% and 3.5% CAGR for its peers and the industry average. This underperformance may be attributed to RFG's focus on the struggling retail sector and its failure to adapt to changing consumer preferences.



The company's revenue has declined by 14.72% in 2023 compared to the previous year, indicating a slowdown in business growth. Additionally, RFG reported losses of -1.85 million in 2023, which is 48.3% more than in 2022, suggesting financial struggles. The company's stock price has also been volatile, with a 5-year change of -35.95%, reflecting investor concerns. Lastly, RFG's large one-off items impacting financial results and unstable dividend track record have raised risks for investors.



RFG's strategic shifts, while aimed at improving the company's long-term prospects, have contributed to the share price decline experienced by RFG shareholders over the past five years. In 2018, the company announced a strategic review, leading to the closure of underperforming stores and a focus on core brands. However, this restructuring came at a cost, with RFG reporting a $140 million loss in 2019. Additionally, the company's expansion into the United States through the acquisition of Gloria Jean's Coffees proved unsuccessful, with RFG exiting the US market in 2020. Furthermore, RFG's decision to refranchise its Michel's Patisserie and Brumby's Bakeries businesses in 2021 resulted in a significant decrease in revenue.



In conclusion, RFG shareholders' 36% loss over five years can be attributed to a combination of market trends, financial performance, and strategic decisions. As the retail sector continues to evolve, companies like RFG must adapt to changing consumer preferences and maintain a balanced approach to growth and cost management. Investors should remain vigilant and monitor the company's progress closely to make informed decisions about their investments.