Oliver’s shares have now doubled this week as new management take a knife to old stores
Food & Agriculture
Food & Agriculture
Healthy fast food chain Oliver’s (ASX: OLI) is continuing on its cost-cutting mission, following a big shakeup of the board and management.
The company told the market last night that it has finalised the liquidation of four subsidiary companies that owned stores now closed.
The store closures form part of an “ongoing commitment of the new Board to return the Company to profitability”, Oliver’s said.
Along with saving some extra cash, liquidating the companies will allow Oliver’s to remove contingent liabilities from its books.
Shares in the company were up over 10 per cent to morning trade to 4.3 cents per share.
It’s been an action-packed month of March for Oliver’s, which is targeted at travellers and has most of its stores situated on main arterial highways next to fast-food chains.
On March 1, the company announced that all but one director had walked out en masse, following previous CEO Jason Gunn’s return to the board.
That walk-out party included former CEO Greg Madigan, who was only in the role for 10 months. And it all happened a week after chairman Mark Richardson resigned, effective immediately.
Then on Monday this week, new chairman Nick Dower looked to ease the market’s concerns, stating the company still had the potential to return to a stable profit-making enterprise.
His comments seemed to work, as shares in the company jumped more than 30 per cent, and that followed up with another big gain on Tuesday.
Following this morning’s 10 per cent gain, shares in Oliver’s have now doubled over the course of this week.
But it’s been a rocky road for the company, which listed at 25 cents per share in June 2017.
Since then it’s been forced to issue a string of earnings downgrades as it struggles to establish its business model.
After burning through cash throughout the second half of last year, Oliver’s immediate strategy has focused around cutting costs.
Upon his return to the company, Gunn has slashed his salary by two-thirds while Dower says Oliver’s can reduce weekly cash outflows to around $100,000, from a previous burn rate of $900,000.