The administrators of vacuum cleaner retailer Godfreys Group have revealed their plans to save the struggling business, while sacked staff have been offered an unlikely lifeline.
News.com.au broke the news of Godfreys’ collapse last Wednesday after the business called in voluntary administrators the day before.
At that time, the administrators, Craig Crosbie, Robert Ditrich and Daniel Walley of PwC, said the business would continue to trade, but that 193 jobs would be axed and stores would be closed in an attempt to improve its financial position.
The Australian Financial Review has reported the business is now on the market, in a sales process called ‘Project Sweep’, which is also being run by PwC.
A confidential sale flyer said PwC would consider offers for Godfreys’ business and assets via a deed of company arrangement, restructure or asset purchase.
The administrators’ plan to return the company to profit includes shrinking from 160 to 113 stores, of which 85 would be Godfreys-owned locations and 28 would be franchised stores.
This would include 25 stores in Victoria, 20 stores each in NSW, Queensland and New Zealand, 15 stores in WA, 10 in SA and three in Tasmania.
Potential buyers have also been told there is an opportunity to buy the remaining franchised stores and change them into company-owned stores, in a move that the administrators estimate would lift its gross profit to $10.6 million.
The management-led turnaround plan also includes fixing its cost base and finding other operational efficiencies.
Figures presented in the sales document suggest the smaller company could achieve sales of
$163.1 million, with a $70.1 million gross margin.
Meanwhile, the Herald-Sun has reported that lawn mowing entrepreneur Jim Penman, of the Jim’s Group, has thrown a lifeline to the 171 sacked Australian Godfreys workers, offering them each a free Jim’s Cleaning franchise worth up to $35,000 each.
“It’s obviously very sad for people to lose their job, their workmates. Some of these workers have been at Godfreys for decades,” Mr Penman said.
“They’re great people and very good workers, so we’re excited about offering them their own franchise.”
In its sales pitch to buyers, PwC is leaning heavily on Godfreys strong brand recognition and 90-year-history.
The business is well-known for its unique television commercials featuring former long-time CEO John Hardy, which showed their vacuums were so strong they could suck up a bowling ball.
The business was founded in 1931 by Godfrey Cohen and business partner John Johnston, and Adelaide’s Johnston family remains a major shareholder.
But it had been losing money before the decision was made to call in the administrators.
Its latest financial report, for the 12 months to July 1, 2022, showed a net loss of $4.24 million.
A director of Godfreys, Mr Grant Hancock, said: “While the decision to appoint Administrators was difficult, it was made with the best interests of Godfreys’ employees, customers and broader stakeholders in mind”.
Last week Mr Crosbie said Godfreys had failed due to a “challenging economic and operating environment”.
“Lower customer demand amid cost of living pressures, higher operating costs, and increased competition have all taken a toll on profitability, with some stores more impacted than others.”
“We intend to trade the restructured store network and sell the business and assets as a going concern, with strong interest expected from prospective buyers,” he added.