Godfreys Slammed On Weak Christmas Sales
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Whoosh, down went shares in vacuum cleaner retailer Godfreys to new record lows yesterday on yet another round of bad news.
The shares tumbled more than 17% to 31 cents, their lowest since listing at the end of 2014. They ended at 32 cents, down 16.8%.
The reason? Another poor sales report - this time for the Christmas period and the six months to the end of December.
As a result, earnings will be sharply lower and the company and warned impairments could lead to a half year loss of around $59 million. Godfreys said it expects underlying earnings of $3.6 million for the first half, down from $6.3 million a year earlier, after trade in December was weaker than expected, and like-for-like sales in October and November were also disappointing.
Unaudited like-for-like sales for the six months to December 29 were down 6.2% l from the December, 2016 half year.
Godfreys has also slowed the conversion of its stores to franchises, as it works to improve its core business in order to maximise the sale value of those conversions.
It said its weaker sales and the reduction in conversions of stores to franchises will require a further impairment of goodwill and intangibles, which is expected to be $75 million before tax.
If the impairment is recognised in the company’s accounts for the first half of 2017-18, Godfreys expects to post a net loss of around $59 million, it said.
The company will release its half year financial results on February 20, along with an updated forecast for annual underlying earnings. A strategic update is due the same day.
About the only good news was a small fall in net debt. The company said that net debt at December 29 was $16.2 million, down from $18.3 million in the previous corresponding period and down from $16.5 million as at June 30 last year.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.