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Godfreys Chairman Exits, Flat Earnings Forecast, Franchise Fees Drop

Specialist vacuum retailer, Godfreys, has informed shareholders it expects its earnings for 2018 to be flat against last year, following a decrease in franchise fees. Chairman, Rodney Walker, also announced he would retire from Godfreys board at the end of the year.

During its AGM in Melbourne this morning, the retailer announced it does expect improved commercial performance in 2018 (across both retail & wholesale businesses), though decreasing franchise fees would weigh down and negatively impact earnings.

Chief Executive, John Hardy, revealed Godfreys’ retail sales had stabilised through fiscal 2017 and were indicating signs of improvement for 2018.

Hardy states the first quarter of the financial year offered like-for-like store sales similar to that recorded the same time last year:

“While we anticipate variability in our like-for-like sales across any given month, we are pleased with the improving trend and turnaround in our business”

“We are continuing to focus on improving the fundamentals in fiscal 2018. We are excited by new product releases as well as the benefits we expect from our refreshed training and incentive structures, and we will continue with our strategy of converting the right company stores to franchises”.

Godfreys’ underlying EBITDA is expected to remain at similar levels –  reported underlying EBITDA for 2017 was $14.1 million, a drop of 19.8%.  The retailer posted a net loss of $18.4 million, largely weighed down by a $24 million impairment to goodwill.

Since listing on the ASX in 2014, the retailer has issued a number of profit downgrades.

During the IPO shares were sold at $2.75, before falling to 57.5 cents on the back or numerous CEO changes and various profit warnings.

Godfreys’ shares were priced at 70.5 cents Thursday morning.

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