Godfreys hit by weak Christmas sales

Godfreys hit by weak Christmas sales
Vacuum cleaner retailer Godfreys (ASX: GFY) has released a trading update warning that its sales were softer because of a weaker-than-expected Christmas period.

In early December Godfreys warned it expected weaker like-for-like sales and the company says its unaudited sales for the half year to 29 December 2017 were 6.2 per cent lower than the same period from a year earlier.

"Godfreys trading across the Christmas period was also weaker than expected," Godfreys says in an ASX statement.

Godfreys says company now expects to report a net loss after tax of around $59 million, if the non-cash impairment of goodwill and intangibles, which is expected to be $75m before tax, is recognized in the financial report for the half.

It also expects its underlying earnings before tax, depreciation and amortisation (EBITDA) to fall 42 per cent from $6.3 million year over year.

The company pointed to a slow franchise conversion along with sluggish sales as the main reasons for the profit warning.

"The reduction in franchise conversions and softer underlying trading performance will necessitate further impairment of goodwill and intangibles," the company says.

The news sent Godfreys shares down by 13 per cent to $0.33 at around 11.45am AEDT, their lowest value since the company listed on the ASX in December 2014.

Godfreys Group is one of the largest speciality retailers of domestic and commercial floorcare and associated cleaning products in Australia and New Zealand and sells company-owned brands, including its exclusively licenced Hoover brand.

Its products are distributed through 212 branded retail stores (129 company-owned and 83 franchised) located in standalone 'superstores' and shopping centres and retail shopping strips in Australia and New Zealand.

Godfreys successfully completed an IPO in 2014 and it now employs 456 permanent staff, with head offices and a company-operated warehouse located in Victoria.

Godfreys new CEO Jason Gowie will provide financial results and a strategic update on February 20. 


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