The new boss of Godfreys Group has embarked on a rescue mission at the vacuum cleaner retailer, promising to ramp up e-commerce and wholesale distribution as sales continue to slide.
Godfreys has suffered a further sales slump and plunged to a $59 million loss for the first half of 2017/18, with new recently installed chief executive Jason Gowie pledging to turn around the business’ ailing fortunes over the next three years.
“We are confirming the continuation of a negative like-for-like sales trend which has been consistently around minus six to seven per cent for the last three halves,” Mr Gowie said on Tuesday.
“It was clear to me when I joined Godfreys in early December that there is fundamental value in the business but there is a need for change.”
Godfreys booked a net loss of $58.6 million for the half, following a previously flagged $75.2 million impairment charge and other business restructuring costs.
The headline result is worse than a $21.7 million loss a year ago.
Underlying profit – which excludes one-off items – for the six months to December 29 fell nearly 62 per cent to $897,000.
Godfreys shares were down two cents to 30 cents at 12.27 AEDT, the lowest level since listing on the Australian Securities Exchange in 2014.
The company has 222 stores across Australia and New Zealand, some of which may be closed, relocated or refurbished, Mr Gowie said.
“We need to increase our focus on e-commerce and we also need to expand our wholesale distribution channels,” he said.
Mr Gowie said investment was “probably over-balanced” too heavily towards bricks and mortar stores and a “rebalancing exercise” was needed.
Mr Gowie said it was likely Godfreys was losing sales to competitors such as Harvey Norman and JB Hi-Fi.
He has commissioned a customer and market survey of 1,300 people to determine what factors drive consumer behaviour, with results due next month.
Godfreys underlying earnings for the half fell 43 per cent to $3.6 million.
The company anticipates full-year earnings to be between $5 million and $6 million due to a continuing decline in like-for-like sales.
CLEAN-UP NEEDED AFTER GODFREYS MESSY HY18:
* Net loss $58.6 million, down from $21.7 million
* Revenue down 8.9 per cent to $84.2 million
* No dividend declared