Freshii (TSX:FRII) made its debut on the TSX all the way back in early 2017. There was considerable enthusiasm for the brand at the time, but investors have soured on Freshii since then. The story has not improved in 2020.
Shares of Freshii have dropped 48% over the past three months. Moreover, the stock has failed to gain any momentum in the April market rally.
The company released its fourth-quarter and full-year 2019 results back on February 25. System-wide sales rose 7% in 2019 to $184.4 million. Freshii opened 31 net new stores in fiscal 2019, which represented year-over-year net store growth of 8%. Adjusted EBITDA rose 10% to $6 million for the full year.
Freshii appeared to gain some momentum ahead of its Q4 2019 earnings release. However, this had deflated after another disappointing quarter.
To make matters worse, the COVID-19 outbreak has ravaged the restaurant industry. Some early studies anticipate that more than 10% of restaurants will not be able to reopen after the nationwide lockdowns.
In Ontario, Canada’s most populous province, there is still no concrete timeline for the reopening of restaurants.
Soft sales and a massive disruption in the sector may Freshii a tough stock to recommend right now. The company boasts an immaculate balance sheet.
However, the value is not there for investors who may want to take a gamble. Freshii remains a stock to avoid as we look ahead to May.
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