Two out of 12 SA Godfreys stores are set to close, after the iconic retailer collapsed
At least two out of 12 SA Godfreys stores are set to close, after the iconic retailer collapsed amid cost of living and economic pressures.
SA News
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One of Australia’s leading retailers has collapsed amid cost of living and economic pressures that sparked its demise after cleaning out profits.
Godfreys Group, the iconic retailer of vacuums that has been selling cleaners for almost a century, plunged into voluntary administration on Tuesday, prompting a sales rush on heavily discounted goods.
Godfreys, which was founded in 1931, is one of the world’s largest vacuum retailers with strong South Australian links.
The troubled retailer was also among Australia and New Zealand’s leading suppliers of specialty commercial floor care and associated cleaning products.
The future of the failed company, which employs 600 staff, was in grave doubt last night as customers – especially local cleaning firms – and workers told of their shock at its financial woes.
Administrators PricewaterhouseCoopers will continue to trade while undertaking an urgent restructure and sale.
Falling demand, cost of living pressures, higher operating costs, and increased competition took its toll, they said. More than a third of its 141 stores across Australia and New Zealand will close, including two in South Australia, while almost 200 staff will lose their jobs.
An additional 28 franchisee stores are also affected.
The majority of job losses at the business, owned by the well-known retailing Johnston family, will be in Australia.
While voluntary administrators were still working through potential worker cuts, it is believed up to 10 Adelaide staff may lose their jobs.
At least 54 stores will close across the business within a fortnight, including its inner southern suburbs store at Unley and Hilton “superstore” premises in Adelaide’s west.
The retailer, known for its cheesey 1980s advertising campaign in which its then CEO held up a bowling ball with a vacuum cleaner, has also failed to publish critical financial documents for its latest 2023 financial year, which could be a breach of corporate law, and attract a fine.
Management accounts revealed a blowout in losses that ultimately led to the corporate graveyard.
Records show the struggling firm was on track to post losses of more than $30m.
The first Godfreys store opened in Melbourne in 1936, followed three years later with the first SA store in Adelaide Arcade in 1939.
The business was sold to private equity investors CCMP Capital Asia and Pacific Equity Partners in 2006 for more than $300m but when it listed on the Australian Stock Exchange in 2014 it was valued at just $111m.
Former patriarch John Johnston, a business co-founder, was still active with his company shortly before he died in 2018 aged 100. This included reopening the company’s Adelaide Arcade shop in 2018, during which he made the first sale after buying back the business for $13.7m.
In a statement issued through an Adelaide-based public relations firm on Tuesday, Mr Johnston’s daughter, Jane Allen said her family were “deeply saddened” at their “very difficult decision” after a proud trading history, spanning more than 90 years.
“Sadly, like many retailers, we have been heavily impacted by consumer confidence and spending due to the economic era of high inflation, rising interest rates, and intense cost of living pressures,” Ms Allen said.
“We are also still suffering from the unprecedented business disruptions of the Covid-19 pandemic. While it’s deeply regrettable, we need to take this action.”
She said despite its best efforts to improve profitability, Godfreys was hit with conditions including the weakness in consumer spending.
A shift into commercial cleaning products over the past decade failed to improve profits while it also missed the consumer shift to stick-vac vacuums, which cost sales.
Ms Allen noted her late father re-entered the workforce aged 100 to help rebuild.
“He valued our employees, many who have been with us for up to four decades,” she said. “Godfreys’ employees and customers are at the heart of everything we do and it’s a very emotional time.”
Knock Knock Cleaning Service owner Maria Mavromatis, 36, of Wayville, shopped at Unley Godfreys since starting her business seven years ago.
She discovered the closure when her mum called.
Ms Mavromatis, who employs eight workers, rushed to the store that was like “a family” and discovered a fire sale. She spent at least $1700 instore.
“I came in because I wanted to support the store and the local business but it was very emotional coming in and saying goodbye to the people that know me and the things I need,” she said.
“I wanted to purchase something but it was hard to accept their prices today, it honestly felt like they were giving things away. I think there were discounts up to 75 per cent off and I was able to buy vacuums, chemicals and other supplies for very cheap.”
VIP Home Service franchise cleaners Andrey Urusova, 49, and his wife Ekaterina, 47, of Craigmore, struggled to imagine operating without Godfreys where they had shopped for nine years.
“The quality, the service, and the overall experience of going to Godfreys has always been easy for us,” said Ms Urusova.
“And I think Godfreys might be the only store in SA that sells some of the high quality specialist equipment that we need in our job.”
Maxi Clean owners Max Oussatchev, 42, and wife Nadia, 43, of Unley, discovered its closure while buying vacuum bags. Mr Oussatchev intended to buy just a few things but spent at least $2500.
“We always stop here to get a few things and it will just be inconvenient once the store closes,” he said.
The first creditors meeting is next week.
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