Australian food and retail franchise owner and operator Allied Brands (ASX: ABQ) has lowered profit guidance for the second time in six weeks due to larger write-downs.

The company said today it now forecasts a flat earnings result for 2009 to 10, below the $5 million guidance for underlying profit announced on June 11.

Shares in Allied Brands plunged 1.1 cents, or 23.91 per cent, at 3.5 cents.

Reductions in book value were predicted to range from $30 million to 32 million, far higher than the $13 million to 15 million forecast in June.

According to the company, the write-downs reflected further revisions made following an operational and strategic review and after talks between the Allied Brand's auditors and the board.

The carrying values of the Cookie Man, and Villa and Hut divisions were reduced, while $3.5 million was written off the price of fixtures and fittings after 14 stores were shut down.

Allied Brands said, the higher write-down also reflected the end of the Awesome Entertainment business and the withdrawing of Area Development contracts of $4 million.

The lower earnings projection was also attributed to the failure to complete contracts for the sale of the Bay Swiss franchised stores, as well as significantly higher trading losses in these stores and elevated bad debt provisions.

To "help return the company to profitability", Allied Brands said it was slashing about $3 million in overheads and cutting operating costs by $4.5 million a year through rationalisation.