Godfreys Stores To Shift To A Franchise Model
Godfreys is set to convert up to 60 of its stores to a franchise model in the next three years.
The news follows the acquisition of The Good Guys, a major competitor in the vacuum cleaner market, by JB Hi-Fi last month.
Godfreys announced the plan at its annual general meeting this week, with restructuring expected to cost $2 million. The company is aiming for 140 of its 224 stores to be franchised by 2019.
“This streamlining of our store portfolio will enable greater management focus on our more profitable larger format stores. It will also deliver medium- and long-term improvements to both profitability and the balance sheet,” Godfreys chairman Rod walker said.
The retailer has been struggling financially due to shifts in the vacuum cleaner market in recent times, including a surge in popularity of stick vacuum cleaners which Godfreys failed to capitalise on. Net profits have fallen from $11.5 million in 2015 to $9.2 million in 2016, with an expected $6-6.6 million in 2017.
Investors have responded positively to the franchise model plan, with shares increasing up to 8 per cent to 92 cents. Shares traded as high as $3.55 in March of 2015.