Retailer Godfreys has warned of a serious cash flow squeeze in early July and the need for an emergency financial injection after new management installed by the 99-year-old owner found a worse financial situation than anticipated.

John Johnston, 99, has now snared more than 80 per cent of the shares in the vacuum cleaner retailer in his takeover bid. But his new management team put in place on May 25 have found the financial situation has deteriorated more than expected at the group, which operates more than 200 retail outlets in Australia and New Zealand.