Vacuum retailer Godfreys sucks up full-year forecast

VACUUM retailer Godfreys has lowered its full-year earnings forecast range to between zero and $1.5 million following a review of the company’s books by its new leadership team.

The profit warning — its fourth this year — comes after Godfreys’ 99-year old founder regained a controlling stake in the company and shook up its senior executive ranks.

In a statement to the Australian Securities Exchange yesterday, Godfreys said likefor-like sales, which strip out the impact of shops opening and closing, were down 8.5 per cent for the year to date, compared with the same period a year earlier.

Like-for-like sales so far in June were down 14.8 per cent compared with the same period last year, it said.

Godfreys said it now expected to book full-year earnings before interest, tax, depreciation and amortisation of between zero and $1.5 million, before restructuring and one-off costs and year-end accounting and audit adjustments.

Earlier this month, Godfrey’s warned a preliminary review of the company’s books indicated that without further financial support, the company would likely have “cash flow challenges” as soon as July.

Ninety-nine-year old John Johnston, who co-founded the company in 1936 with Godfrey Cohen, took a controlling stake in the company last month, then former head John Hardy was reinstated as chief executive.

The company reiterated yesterday that it was in discussions with its principal financier, 1918 Finance, which is controlled by Mr Johnston, on extending the limit on its $30 million senior debt facility.

“The Godfreys board is seeking advice about all options available to enable Godfreys to make a substantial repayment to 1918 Finance including a rights issue and will update the market appropriately in due course,” the company said.

Should Mr Johnston’s Arcade reach a 90 per cent stake in Godfreys, it will compulsorily acquire all outstanding shares, delisting the company.

Mr Johnston told Godfreys shareholders in April that a restructure of the company would be required to restore its value.