Shares in Godfreys have fallen to a record low after the vacuum cleaner retailer said sales were weak during the Christmas period, and warned impairments could lead to a half year loss of around $59 million.
Godfreys said it expects underlying earnings of $3.6 million for the first half of the financial year, down from $6.3 million a year earlier, after trade in December was weaker than expected, and like-for-like sales in October and November were also disappointing.
Unaudited like-for-like sales for the six months to December 29 were 6.2 per cent lower than in the same period a year earlier, the company said.
Godfreys has also slowed the conversion of its stores to franchises, as it works to improve its core business in order to maximise the sale value of those conversions.
It said on Thursday that its weaker sales and the reduction in conversions of stores to franchises will require a further impairment of goodwill and intangibles, which is expected to be $75 million before tax.
If the impairment is recognised in the company’s accounts for the first half of 2017/18, Godfreys expects to post a net loss of around $59 million, it said.
Shares in Godfreys dropped 6.5 cents, or 16.9 per cent, to 32 cents on Thursday, their lowest value since the company listed on the ASX in December 2014.
The company will release its half year financial results on February 20, along with an updated forecast for annual underlying earnings.