Funding for Godfreys

Johnston family buys time to search for white knight

The owners of the failed Godfreys vacuum retail chain, the Johnston family, will continue to fund the ailing retailer as its administrators look for a potential white knight buyer.

The news comes as 54 underperforming stores have closed already with the loss of almost 200 jobs.

Administrators to the almost 100-year-old Godfreys, Craig Crosbie, Robert Ditrich and Daniel Walley of PricewaterhouseCoopers Australia, have also won approval from the Federal Court to push out the second meeting of creditors to May 28 to give them more time to conduct a forensic investigation into Godfreys’ collapse while also fielding expressions of interest from possible buyers.

The first creditors meeting will be held on Friday, with the Johnston family the largest creditor and owed more than $60m.

Early details are emerging too of a struggling Godfreys business. The latest findings of the administrators are that Godfreys was losing about $20m a year while its revenue was flatlining, with high rents, a swollen wages bill and the rising wholesale costs of its vacuums squeezing margins. It is believed the higher wages bill was particularly exacerbated by a larger corporate head office and warehouse.

About a dozen companies have expressed interest in the business but it is still only an outside chance that Godfreys will return in its present form as a standalone vacuum retail specialist, with the most likely outcome that its well-known and historic name and operations are absorbed into an existing retailer.

Godfreys Group, the iconic retailer of vacuums that had been selling cleaners for almost 100 years, collapsed into administration last week, with cost-of-living pressures and the challenging economic environment denting its profitability, shrinking margins and ultimately causing its demise.

The business had been owned by the Johnston family, with former patriarch John Johnston a co-founder of the business and still active within the company at 100 years of age in 2018 when he launched a $13.7m takeover bid to take the company private from its then ASX public listing. He later died, just five months after he led the successful takeover of the business.

Now the Johnston family will provide a lifeline to the administrators of Godfreys through their 1918 Finance vehicle, which will help the remaining Godfreys stores to trade for at least the next few months as administrators spruik the company to potential buyers.

On Monday night, the administrators sought court approval to extend the second meeting of creditors to May 28 as they seek more time to take in interest and hopefully offers for all or parts of the business.

The funding lifeline from the Johnston family will help Godfreys to continue to trade as a going concern.