Shares in vacuum cleaner retailer Godfreys have plunged to an all-time low after the company cut its earnings forecast due to weaker-than-expected sales and delays in its franchise rollout.
Godfreys has warned its 2017/18 earnings will be $3.5 million to $4 million lower than previously forecast because of delays in conversions of company stores to franchise outlets, cutting the contribution from initial franchise fees.
Just two or three franchise conversions, contributing $500,000 – $1 million in earnings, are now anticipated in 2017/18, Godfreys said, compared to the previously expected 15 contributing approximately $4.5 million in EBITDA.
The company also warned October and November sales figures had been weaker than anticipated in August, when it told shareholders that like-for-like sales were in line with the previous year.
In light of sales volatility, the company said it would now be “re-setting” its full-year underlying earnings forecast when half-year results are released in February, to allow for an anticipated holiday trading sales bump.
Shares in Godfreys were at all-time lows on Friday – down eight cents, or 16.2 per cent, to 41.5 cents at 1412 AEDT, having fallen as low as 39 cents during the morning.
In 2016/17, 22 store conversions contributed $5.7 million in earnings, including $5.3 million in franchise fees.
Godfreys said the conversion program would now be slowed further as it focuses on improving its core business to maximise the sale value of future conversions.
Meanwhile, Godfreys also announced that Brendan Fleiter would take over from Rod Walker as group chairman in January, while Jason Gowie takes over as chief executive on December 4.
Mr Gowie replaces managing director John Hardy, the star of its 1990s TV commercials, who stepped in as CEO after his predecessor left prematurely.
Mr Fleiter said Mr Hardy’s contribution to Godfreys and the Australian retail sector over the past 50 years had been “monumental”.