BURLINGTON, Ontario -- Afton Food Group Ltd. (TSX: AFF), a franchisee of multiple quick-service food brands, including 241 Pizza, revealed its ongoing struggle toward profitability continued in fiscal 2002.
According to a news release, revenues for the year, which ended Dec. 31, 2002, were $26.4 million (U.S. $17.6 million), a decline of 13 percent compared to the same period in 2001.
The company blamed the revenue drop on a reduction in new store openings and a decrease in leasing and franchise revenues from under-performing franchised and corporate stores closed during 2002.
According to the release, cost of sales and selling and general and administration expenses increased by 4 percent and 32 percent respectively. The increases were directly related to write offs centered on the closure of its one-number call center (established in 2001 and closed a year later), allowances for doubtful accounts receivable, as well as professional fees and costs related to settlements and negotiations with landlords on closed stores.
The results of the foregoing financial provisions coupled with substantial interest increases and provisions for other restructuring costs resulted in a net loss of $17.2 million (U.S. $12.3 million) for 2002, after a restructuring charge of $14.2 million (U.S. $10.2 million).
In the release, Afton mentioned the implementation of a 20-point plan to turn the company around. The strategy includes restructuring of staff and debt, as well as boosting working capital and top-line revenues.
In addition to 241 Pizza, Afton operates, develops and franchises and Robin's Donuts.