My Food Bag's chief executive is 'very mindful' of its share price falling 88 per cent since listing, and is laser-focused on returning it to growth. Video / NZ Herald
My Food Bag’s board has defended executive salaries and performance shares while maintaining its plan to “right-size” the company after a drop in profits in the last full year.
The company’s annual meeting, held in Auckland today, focused on how the company plans to boost profits after a 60per cent drop in the 2022 financial year.
My Food Bag shares recently traded at 19.5c, down 72.9 per cent over the past 52 weeks. The stock has never lived up to its 2021 issue price of $1.85.
Shareholder David Beagle said the market appeared to have “lost faith” in the company, grilling the board about executive salaries and share issues to CEO Mark Winter and CFO Leanne Dekker, “considering My Food Bag’s abysmal performance and the decision not to pay the interim dividend” this year.
Chairman Tony Carter told investors that cutting executive salaries was not on the table.
“We have to reward people for what they do. We have to put it into perspective, we’re still profitable,” Carter said. The company made a net profit of $7.9m in the 2022 financial year, but that was 60 per cent down on the previous year.
“If you lose executive salaries, you lose people and that’s not what we want to do,” Carter said.
Winter was appointed CEO in October last year. The annual report shows he received a base salary of $248,538 for the part-year to March 31. He was also granted performance rights as part of the company’s short-term and long-term incentive schemes.
Retiring company director Jon Macdonald said remuneration is performance-related.
“While we acknowledge performance, we still want the team to perform. We need to recognise the capability they bring and how hard they work, so we need remuneration to reflect that,” Macdonald told investors.
When asked about institutional shareholders selling out, Carter said retail investors appear to be buying up available stock, “which is good”.
Mark Winter received a base salary of $248,538 for the part-year to March 31.
Looking ahead
Winter told the Herald the company’s $5m investment in picking technology will remove manual processing costs, while reducing warehouse sites in Highbrook and Māngere to just one in Māngere will “remove lease costs”.
Winter also said “right-sizing” the company’s lending facilities will help cut costs in the short term.
He told investors that while revenue was down 9.4 per cent on the prior year with demand softening over the second half, the trend is in line with the current economic environment.
“We have seen demand largely stabilise over the full-year 2024 year to date and we are very focused on acquiring quality customers through ensuring our offering is relevant, convenient and great value.”
His focus was on the “four pillars” of customer growth: increasing awareness of the more affordable Bargain Box option, more recipe choices, setting the health-focused Fresh Start box apart as a clear brand, and expanding its add-on selection.
Winter said the team has implemented strategies to focus on growing active customers, which includes new picking technology which helps improve accuracy, and recipe offerings have increased from 35 per week to over 60 recipes.
He said labour cost reductions and less waste from the technology will help to offset other inflationary pressures across supply chain and overhead costs.
“We have rolled out comparative advertising around supermarket pricing, highlighting that Bargain Box was on average 4 per cent cheaper than Countdown and New World delivered over an 11-week comparison period,” Winter told investors.
“Earlier this year we committed to a six-month price freeze on Bargain Box with clear messaging supporting Kiwis to plan their weekly food spend.”
My Food Bag chairman Tony Carter told investors cutting executive salaries was not on the table. Photo / Michael Craig
He said Bargain Box deliveries were up 2 per cent on the previous year with a 12 per cent growth in active customers for the option.
The Herald reported in May that the company cut 10 per cent of its non-operational team and planned to delist from the ASX because of “poor liquidity and low daily trading”, but that has not happened.
The company also dropped its employee share ownership scheme (ESOS) for eligible staff next year.
“Our focus on costs is continuous, and we will continue to manage and reduce these where it makes sense to do so,” Winter told investors
Return to dividends?
Winter said the company is “positioned” to grow its active customers following strategies currently in place.
Carter said the company’s focus is on the core business: “We want to focus on the business that we have.”
On the decision not to declare an interim dividend, Carter said, “We expect to resume paying dividends in respect of full-year 2024 but have not yet determined whether we will pay an interim dividend following our half-year results.
“Our cash position in full-year 2023 was impacted by our strong full-year 2022 year and the timing of the 2022 full-year dividend and final tax payments falling into the current year,” he told investors.
“We anticipate that the economic environment will continue to be tough for some time but we are confident that our adaptability and resilience holds us in good stead, and we will continue to do what we do well.”
Alka Prasad is an Auckland-based business reporter covering small business and retail.
