Revenue Falls 18% at Oliver’s Real Food as Cost Pressures Challenge Recovery

March Quarter Financial Overview

Oliver’s Real Food Limited (ASX: OLI) released its March 2025 quarterly results showing a revenue decline to $6.196 million, down 18.15% compared to the same period last year. The drop was largely attributed to the closure of three stores, Hexham, Lithgow, and Coffs Harbour, which accounted for a $443,000 revenue reduction. Additional factors included calendar effects such as the leap year in 2024 and the timing of Easter trading days, which shifted some revenue from March to April this year.

After adjusting for these impacts, same store sales were still down by 6.97%, reflecting ongoing challenges in the retail food sector amid a competitive environment and cost pressures.

Encouraging Margin and Earnings Improvement

Despite the revenue headwinds, Oliver’s Real Food demonstrated a significant turnaround in profitability metrics. The company’s EBITDA margin rose to 11.52% in the March quarter, a stark improvement from the negative 4.02% recorded in the June 2024 quarter. This margin recovery underscores the effectiveness of the company’s restructuring efforts over the past three years, which have focused on streamlining operations and addressing foundational weaknesses.

The operating result showed a positive trajectory, with earnings before interest and tax (EBIT) improving and net profit before tax (NPBT) returning to positive territory at $497,000 for the quarter.

Operational Initiatives and Cost Management

Management highlighted ongoing initiatives to enhance operational efficiency, including the rollout of a dynamic rostering system in April 2025 aimed at reducing employment costs while maintaining customer service standards during peak periods. This move is expected to yield further cost savings and margin improvements in upcoming quarters.

Additionally, the company is actively negotiating with landlords to improve store conditions and reduce outgoings, with some early successes anticipated to materialize over time. These efforts reflect a proactive approach to managing the cost base amid rising inflationary pressures and a challenging retail landscape.

Cash Flow and Financing Position

Oliver’s Real Food maintained a stable cash position with $233,000 in cash and cash equivalents at quarter-end, alongside $600,000 in unused financing facilities. Net cash from operating activities was positive at $61,000 for the quarter, signaling ongoing operational cash generation despite revenue pressures.

The company’s financing arrangements include secured and unsecured loan facilities with related parties, carrying interest rates around 7.3% per annum. Payments to related parties, including interest and directors’ fees, totaled $284,000 during the quarter.

Outlook and Market Confidence

While acknowledging that the business is not yet fully transformed, the Board expressed cautious optimism about the company’s future prospects. The improved EBITDA margin and positive cash flow provide a foundation for further progress, even as the company navigates ongoing cost-of-living pressures on customers and competitive challenges in the food retail sector.

Notably, Easter trading showed encouraging signs, with same store sales rising 8.71% over the four-day period compared to 2024, including standout performances at Wyong North and Pheasant Nest South stores.