Cooks Global Foods First Quarter 2018 Operating Metrics
Cooks Global Foods Limited is pleased to announce the release of its June 2017 Quarterly Update.
Cooks Global Foods (NZAX.CGF) today announces constant currency sales from its global Esquires coffee store network reached $9.9 million in the three months to 30 June, up 8.6% on the same period a year ago.
Network sales, a leading indicator of the revenue Cooks expects to generate from design fees (new stores) and recurring revenues, such as royalties, coffee product and other retail sales, are ahead of the $9.7 million sales achieved in the three months to 31 March 2017. The Esquires network delivered the improvement despite store numbers falling to 93 stores from 98 stores at the end of the fourth quarter of the 2017 financial year.
During the period, Esquires opened a new store in the United Kingdom and two stores in the Middle East. However, these gains were offset by the closure of one store in the UK and four stores in China ahead of the sale of the business into a new joint venture. Additionally, three underperforming stores in the Middle East were closed.
The company remains on target to transition to cash flow break even and for store numbers to reach 140 stores by the end of the financial year through a combination of new store openings and other development initiatives.
The UK and Irish operations, which collectively generate 68% of total network sales, continue to deliver strong results and lead performance across the network with total sales up 21.4% and same store sales up 6.0% overall. Total store sales in the UK rose by 18.5% to $3.7 million, while same store sales rose 3.1% to $3.1 million. In Ireland, total store sales rose 25.2% to $3.1 million, while same store sales rose 9.6% to $2.7 million.
Cooks Global Foods Executive Chairman Keith Jackson said: “The UK and Irish operations continue to demonstrate the potential of the business. Both territories are benefiting from the new brand and store formats that we will roll out across our network. The response to the new artisan style of outlets with an enhanced food offering akin to a New Zealand style café has been superb and rebrands and new stores alike in both countries are outperforming expectations. ”
Mr Jackson said churn in stores was an inevitable part of growing a multi-national franchise chain such as Esquires as it continuously reviews store performance.
“The closure of underperforming stores is the right thing to do even if the closures represent a drag on short term sales performance. The closures improved operational profit and cash flow . The opportunity for Esquires’ artisan style Fairtrade and Organic branded coffee outlets around the world is significant and we remain confident of achieving our financial and operational goals,” Mr Jackson said.
“The stores closed in China faced rent increases which made their continued operation untenable. It also made sense to ensure the new joint venture planned for the Greater China region starts with a clean slate”, Mr Jackson said.
As announced in April, Cooks expects to establish a joint venture company with a Chinese-based investment entity to own the master franchise for the Esquires Coffee brand in China, Hong Kong, Macau and Taiwan. In exchange for a 30% stake in the new entity, Cooks will contribute its Chinese assets. The new entity will benefit from strong cash backing and local partners.
“We are meanwhile working with our partners in the Middle East to lift the performance of the operation. We hope to update the market on steps we are planning in the coming months,” Mr Jackson said.
“As we noted in the last quarterly update the Middle East operations have significant potential to improve as the regional store network completes its transition to the new brand standard and new stores and territories are added.”
Transaction volumes for the three months to the end of June rose 4.7% on the same period a year ago to 1.1 million, slightly ahead of the results reported in March.
Average transaction values rose to $8.93 up 3.7% on the same period a year ago and ahead of the result in March. These trends principally reflect the growing contribution of refurbished and new stores in the UK and Ireland. On a same-store basis, average transaction values rose, but transaction volumes fell due to the the lag in refurbishing our older stores especially in the Middle East.
For further information:
Keith Jackson Richard Inder
Executive Chairman The Project
Tel: +64 21 702 509 Tel +64 21 645 643
About Cooks Global Foods
Cooks Global Foods operates in world markets and is listed on the NZAX market operated by NZX Limited in New Zealand under the code CGF. It owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide excluding New Zealand and Australia. Cooks currently operates or franchises Esquires Coffee Houses in Canada, the United Kingdom, Ireland, Bahrain, Kuwait, Saudi Arabia, UAE, Indonesia, and China. For more information visit: www.cooksglobalfoods.com