Godfreys, a renowned vacuum cleaner retail chain established in 1931, has faced a significant setback, entering voluntary administration amid challenging economic conditions. The company, operating 141 stores across Australia and New Zealand, cited reduced customer demand, elevated operational costs, and intensified competition as contributing factors.
On Tuesday, Godfreys took the step of appointing PricewaterhouseCoopers (PwC) as administrators to navigate the voluntary administration process. Despite the financial strain, the administrators assured that the business would continue trading during an immediate operational restructuring. This restructuring is anticipated to result in the closure of 54 stores and the unfortunate loss of 193 jobs in the next 14 days.
The retail giant’s struggles stem from a combination of factors, including the broader economic challenges and a shift in consumer behavior. The administrators highlighted lower customer demand attributed to cost-of-living pressures, along with heightened operational costs, as key factors affecting profitability. The impact varied among stores, with some experiencing more significant challenges than others.
John Crosbie, a representative of PwC, expressed the intent to swiftly restructure Godfreys to salvage as much of the business and as many jobs as possible. The administrators aim to maintain operations of the restructured store network while actively seeking a buyer for the business. They anticipate strong interest from potential buyers who see value in acquiring the well-established vacuum cleaner retailer.
A pivotal aspect of the restructuring plan involves the closure of 54 stores within the next fortnight. This strategic move is aimed at streamlining operations and addressing the financial strain on the company. Unfortunately, it comes at the cost of 193 jobs, marking a challenging period for employees and their families.
The first meeting of creditors, scheduled for February 9, will play a crucial role in determining the future course of action. This meeting will provide insights into the financial obligations and potential avenues for resolving the company’s debts. The administrators are optimistic about the prospect of finding a suitable buyer who recognizes the potential for growth and sustainability within Godfreys.
The company’s history adds a layer of complexity to its current situation. Founded by Godfrey Cohen in 1931, the business underwent ownership changes over the years. In 2006, Cohen and business partner Johnston sold Godfreys to private equity investors CCMP Capital Asia and Pacific Equity Partners for approximately $300 million. The subsequent listing on the ASX in 2014 brought its own set of challenges, including falling sales, managerial turnover, and a declining share price.
In a somewhat poignant turn of events, Johnston repurchased the business in mid-2018 for $13.7 million, coinciding with his 100th birthday. Unfortunately, Johnston passed away later that same year, leaving the company facing the complex task of navigating the market dynamics.
As Godfreys undergoes this critical phase, the hope remains that a strategic restructuring and potential buyer will pave the way for the preservation of the iconic vacuum cleaner retail brand and the livelihoods it supports. The administrators are committed to acting swiftly to secure the future viability of Godfreys, acknowledging its historical significance in the retail landscape.