The Skor Food Group Inc. (TSX.V: SKF), a vertically integrated food service company announced financial results for the third quarter of fiscal 2008. The Company ended the quarter in a strong financial position with a working capital ratio of 1.65:1, working capital of $8,769,931 and a conservative long term debt to equity ratio of 0.16:1.
The year-over-year changes in the following items influenced the Company's operating income in the third quarter of 2008 compared to the same period in 2007. Increased amortization/depreciation costs, combined with increased occupancy/fuel costs and the inclusion of approx. $306,000 of costs associated with the consolidation at Skor Culinary, were the primary factors that contributed to higher operating expenses.
Revenue and profitability in the Food Service division met management's expectations despite increasingly competitive conditions, wet spring weather conditions that reduced travel to cottage country and recreational facilities such as golf courses, which are a large component of SKOR'S seasonal sales volumes. The Food Service division is moderately sheltered from the current economic downturn because of its solid foundation in institutional business together with a focus on the quick service restaurant market, which tends to be less sensitive to reductions in discretionary consumer spending.
The Wholesale Cash and Carry segment continues to feel the pressure from a competitive retailing environment and the ongoing challenges to obtain and retain new high value customer relationships. Total revenue declined on a year over year basis by approximately 25% of which a significant portion of the revenue decline was in low margin tobacco products. Management will deal with all under-performing locations before the calendar year-end. The Company continues to develop opportunities to differentiate the business model from that of its competition.
Skor Culinary revenue increased on a year over year basis, however, the results were not in line with managements expectations. The Company consolidated operations during the quarter which will result in a substantial reduction in operating costs going forward.
"We will continue to assess each individual operating division's performance and should management be unable to deliver the returns expected by the executives and our shareholders, we will sell or close units to improve the overall performance of the Company," said Vince Capobianco, President and CEO." -- www.cnxmarketlink.com
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