Vacuum cleaner retailer, Godfreys, has informed investors it’s expecting a net loss (after tax) of $59 million – news which has sent the company’s shares to a record low of 33.5 cents.
It’s the retailer’s lowest share price since listing on the ASX in late 2014.
Concerning its outlook for fiscal year 2018, Godfreys states earnings will likely be flat.
In December last year, Godfreys cut its earnings forecast ahead of the Christmas period, however, did expect sales to improve over the holidays.
The retailer states like-for-like sales for the half ending December 29th fell 6.2% compared to the previous corresponding period.
Godfreys’ soft trading update cites lower than expected Christmas sales results, and a slow conversion of company stores to franchises in December. The retailer is scheduled to release its financial results later this month.
The company’s net loss forecast attributes a non-cash impairment of goodwill and intangibles of $75 million before tax.
In a statement to the ASX, Godfreys states, “The reduction in franchise conversions and softer underlying trading performance will necessitate further impairment of goodwill and intangibles”.
“This reversed what had been an improving trend in like-for-like sales through until the end of the September 2017 quarter”, Godfreys affirms.
The retailer’s unaudited underlying EBITDA was significantly lower, coming in at $3.6 million for the half, compared to $6.3 million in the previous corresponding period.
Godfreys states the fall in EBITDA was due to weaker sales and the planned reduction in franchise conversions.
At its recent AGM, then-Chairman Rod Walker affirms Godfreys expects improved performance across its retail network:
“We expect to see improved performance across our retail network and wholesale business, although the contribution of franchise fees from our franchise strategy is expected to reduce from fewer and lower value conversions”.
From January 1st, former Godfreys Board Member, Brendan Fleiter, took over as Chairman.
