Confession time (the month of May and early June for June 30 balancing companies) saw another penitent come forward yesterday – and old stager from the past year in vacuum cleaner chain Godfrey’s which warned that a continuing fall in sales could see full-year earnings landing at the lower end of its forecasts.
In an update issued to the ASX yesterday, struggling retailer said the challenging trading period it had expected in the second half has materialised.
Surprisingly the shares rose, instead of selling off – a suggestion that the news was not a complete surprise to investors.
Godfrey’s said it now expects its 2016-17 underlying earnings before interest, tax, depreciation and amortisation to be at the lower end of its $14 million to $15 million guidance range given earlier this year.
“While the updated guidance reflects a decline in same-store sales in the second half, these have stabilised and are showing signs of improvement," a statement from Godfrey’s said.
Godfrey’s reported a $21.7 million first-half loss following write-downs of $24 million and a 7% slide in same store sales in the six months to December.
The company has previously admitted its late adoption of stick vacuums was an important trend it missed which had cost it sales.
Managing director John Hardy said the company was focused on adjusting product mix, improving sales operations and store composition.
"We expect these changes will improve our competition position although the benefits will take time to be realised," he said in a statement.
The company said it had refinanced to a long term $30 million debt facility which it said has more favourable commercial terms than what it previously had with the Commonwealth Bank.
Godfrey’s shares closed up 8.8%, or 5.5 cents, at 68 cents – a one-month high but a long way from its 2014 float price of $2.75 a share.
And two of yesterday’s featured stocks saw conflicting price movements in their shares yesterday. Nick Scali shares lost another 4% to take the losses in the past six trading days to more than 28%. The Sydney based furniture retailer’s stock ended the day at $6.
The shares started last week at $7.09 and fell $1.73 or more than 24% last week.The shares lost 11% on Thursday and Friday – 5.1% on Thursday and another 5.9% on Friday.
Directors said they had no idea why the shares fell in reply to a “please explain” from the ASX.
And shares in the Ten Network jumped more than 17% yesterday, from 17 cents back to 20 cents, without a query from the ASX, unlike on Friday when they fell from 20 cents to 16 cents and copped a please explain from the exchange.
Directors said they had no idea but noted that substantial shareholder, Lazards had been selling.
They ended on May 10 when Lazards said it was no longer a substantial shareholder. Selling does not drive share prices higher, so yesterday’s surge remains unexplained.
Healthscope shares hit an all time low of $1.98 in trading yesterday, extending their sell-off, falling below $2 for the first time since they listed in 2014.
The shares ended down 3.3% at $2. At the close last Monday there were trading at $2.12.
There was no apparent reason for yesterday’s fall. The stock was downgraded to ‘underperform’ last week by Credit Suisse, with a price target of $2.05.
