Restaurant conglomerate MTY Food Group Inc. says that a whistle-blower’s allegations that delayed its latest earnings report are baseless, but has not specified what those allegations were.
The fourth-quarter earnings report was initially scheduled for last week. When the company announced the delay, chief executive Eric Lefebvre said it would communicate more information when the results were released. The allegations were made by an “active employee” of the company, and “the matters raised are all topics that MTY had evaluated and dealt with in the past,” MTY said in a statement on Monday. On a conference call to discuss the results, Mr. Lefebvre said the allegations covered “a wide area” and were not focused on one topic. He declined to answer questions on the subject of the complaints.
"We can't go into specifics, simply for the reason that the allegations were deemed to be baseless, so there's no point listing them at this time," Mr. Lefebvre said on the call.
Mr. Lefebvre declined to specify whether MTY brought in a third party to review the allegations.
"I don't think we need to give these details," he said in response to a question on the subject.
Montreal-based MTY owns a portfolio of more than 80 restaurant banners. Its brands include coffee shops Country Style, Timothy’s and Van Houtte; food-court staples Manchu Wok, Tiki-Ming, Thai Express and Jugo Juice; frozen dessert shops Pinkberry, Tasti D Lite, Cold Stone Creamery and La Diperie; and burger restaurants Big Smoke Burger, South Street Burger and the Works. The company has 7,373 locations, most of which are franchises. More than half are in the United States; 38 per cent are in Canada and 7 per cent are in other markets.
MTY's stock has fallen more than 10 per cent since it announced the delay.
MTY reported revenue of $150-million for the three months ended Nov. 30, 2019, up 29 per cent compared with the same period in the prior year. That growth was driven mostly by acquisitions, such as the takeout and bake-at-home pizza chain Papa Murphy’s, which accounted for 25 per cent of the company’s sales in the quarter. Same-store sales – an important measure that strips out the impact of acquisitions by tracking sales in locations open more than a year – were up 1.5 per cent, driven by growth in Canada and the U.S. that outpaced a 7.6-per-cent decline in international stores. The company’s fourth-quarter net income attributable to shareholders was $20.7-million or 83 cents a share, compared with $13.2-million, or 53 cents a share in the fourth quarter of 2018.
For the year ended Nov. 30, 2019, the company’s same-store sales were roughly flat – the 0.4-per-cent increase was the first positive same-store sales growth for MTY since 2012. While revenue grew to $550.9-million, up from $412.3-million the prior year, net income fell to $77.7-million, compared with $95.8-million in 2018.
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