New adverts suck, says vacuum retailer

GODFREYS is blaming its television advertisements for a sales dive that has forced the vacuum cleaner retailer to cut its earnings forecast for the second time in two weeks.

And the retailer has warned it is likely to breach loan terms after like-for-like sales for the past two weeks were 27 per cent lower than in the same period last year.

Godfreys yesterday downgraded its forecast for earnings before interest, tax, depreciation and amortisation to $3.5 million for the year to June. It was previously expecting earnings to clock in at the lower end of $5-6 million.

Like-for-like sales so far this financial year were 7.8 per cent lower than at the same time last year, the company said.

Godfreys, whose board yesterday recommended a takeover bid by 99-year-old cofounder John Johnston, blamed the latest fall in sales on changes to its ad campaigns that focused on product benefits rather than discounts.

The latest ads were a far cry from those from the 1990s, when then chief John Hardy famously demonstrated the strength of a vacuum cleaner by sucking up a 16 pound (7.3kg) bowling ball.

“These changes have not resonated with Godfreys’ existing customer base and as such the company has reverted to the previous television advertising approach for this segment of the market,” the retailer said yesterday.

The company said its lender would waive its rights should the breach occur as long as they began negotiations about reducing the debt this week.