Is Godfrey’s Saleable As Vultures Circle Carcass

National retailer Godfreys, who has been flogging vacuum cleaners for close on 100 years has been placed into administration and the vultures are already circling the carcass.

ChannelNews understands that at least two distributors are looking at bidding less than $0.50 cents in the dollar for their existing stock with questions being raised as to whether anyone will buy the remaining stores after the business yesterday announced the closure of more than 50 stores across Australia and New Zealand.

One Company executive said, “If you can get the business and strip it of losses and then renegotiate the leases there may be a possibility of saving the business”.

“This is a difficult one, the Shaver Shop does well as a niche business and there may be a possibility that a restructured Godfreys could trade well, especially if they focus on robotic cleaning”.The family that owns the business have been funding losses in the business for several years, and finances have worsened considerably since 2022, when the retailer breached its covenant on an overdrawn $31.3 million loan according to the AFR.

Godfreys’ administrators, PwC, is believed to have already got offers for stock however industry executives claim that “it’s going to be very hard to save the business as the likes of Harvey Norman, JB Hi Fi and The Good Guys are going to further expand their vacuum cleaner offering due to the failure”.

Godfreys was listed on the ASX for four years, floating at $2.75 per share. The company was taken private by one of its original owners, John Johnston, at 33.5¢ per share in 2018.

PwC’s Craig Crosbie said that like many retailers, Godfreys has faced a challenging operating environment.

“Lower customer demand amid cost-of-living pressures, higher operating costs, and increased competition have all taken a toll on profitability, with some stores more impacted than others,” he said.

“Our aim is to move quickly to restructure Godfreys to preserve as much of the business and as many jobs as possible. We intend to trade the restructured store network and sell the business and assets as a going concern, with strong interest expected from prospective buyers.”

One issue for Godfreys is that they did not sell Dyson vacuum cleaners and recently Hoover vacuum cleaners were ranged at The Good Guys which had in the past been exclusive to Godfrey’s.

Jane Allen, Mr Johnston’s daughter, said the collapse of the retailer was disappointing for the family after more than 90 years of operation.

“Sadly, like many retailers, we have been heavily impacted by consumer confidence and spending due to the economic era of high inflation, rising interest rates, and intense cost-of-living pressures. We are also still suffering from the unprecedented business disruptions of the COVID-19 pandemic,” she said.

“Despite our best efforts to improve profitability through various platforms, unfortunately, Godfreys has been hit by conditions beyond our control, including the weakness in discretionary spending by consumers, which has had an ongoing and significant impact on sales.”

Godfreys does not regularly file accounts with the regulator. Its latest financial report, for the 12 months to July 1, 2022, showed a net loss of $4.24 million, from a profit of $1.48 million one year earlier. Sales reached $179 million, slightly up on the year prior. But net debts jumped from $6.55 million to $18.78 million in those 12 months.

Godfreys chief executive John Morris and the company’s chief financial officer, Steven Mavro, only joined about 12 months ago in an attempt to turn the business around.

The first meeting of creditors will be held on February 9.

About Post Author

David Richards has been writing about technology for more than 30 years. A former Fleet Street journalist, he wrote the Award Winning Series on the Federated Ships Painters + Dockers Union for the Bulletin that led to a Royal Commission. He is also a Logie Winner for Outstanding Contribution To TV Journalism with a story called The Werribee Affair. In 1997, he built the largest Australian technology media company and prior to that the third largest PR company that became the foundation company for Ogilvy PR. Today he writes about technology and the impact on both business and consumers.