The Good Guys expects a market float before any sale to rivals

The Good Guys chief reckons the retailer will float rather than accept a takeover bid.

Michael Ford, CEO of The Good Guys chief executive Michael Ford: “We are going to be able to go into postcodes that historically we couldn’t have gone into.”

If Michael Ford were a betting man, The Good Guys chief executive reckons the retailer would go through with its planned $800 million float rather than accept a takeover bid from rival chain JB Hi-Fi or knock back a non-existent offer from a “disruptive” Gerry Harvey.

“I’ve met with (JB Hi-Fi) management and they like our business,” Mr Ford said, but pointed out that the potential suitor would be competing with “phenomenal” interest in The Good Guys brand from investors keen for an initial public offer.

Mr Ford said while elec­tronics retailer JB Hi-Fi had an interest in expanding into home appliances, which is The Good Guys’ speciality, Harvey Norman chairman Gerry Harvey was not anywhere near the deal.

At a Sydney luncheon yesterday, Mr Ford called Mr Harvey “a disruptive fellow” after the outspoken billionaire flagged an interest in buying out The Good Guys, calling on the Australian Competition & Consumer Commission to look into any prospective deals.

“Gerry’s not even in the process,” Mr Ford said. “He hasn’t even got an information memorandum. He said we hadn’t sent him one; fact is he hadn’t asked for one and I don’t think he’s ­really interested.

“He’s got a great business and he’s got the right contacts and he’s wound up the ACCC.”

Harvey Norman, whose market capitalisation of $5 billion is double the size of JB Hi-Fi’s, could well be in a better position to buy out The Good Guys, which is looking to aggressively ­expand its operations in a ­direct challenge to its rivals.

Mr Ford said The Good Guys had scope for a further 40 new stores, and had plans to open ­between 20 and 25 over the next five years. The company plans to buy out the half of the brand’s 100 stores that are owned by the Muir family and franchisees.

IBISWorld estimates that The Good Guys has a 12.5 per cent slice of the domestic appliance market, while JB Hi-Fi has 13.9 per cent and Harvey Norman has 15.3 per cent. But The Good Guys, which had previously respected its franchisees’ territory, is looking at increasing the company’s presence.

“We are going to be able to go into postcodes that historically we couldn’t have gone into,” Mr Ford said. “What did happen was that our competition, namely JB Hi-Fi and Harvey Norman, cannibalised our postcodes.”

The focus would be on ­expanding in NSW, with planned stores at Marsden Park and Gregory Hills in Sydney, he said, also flagging a second store each in Geelong and Townsville.

Mr Ford said the retailer was working on a “millennial innovation store” to capture the shift in demographic spending. By 2020, millennials are expected to ­account for 30 per cent of discretionary spending.

“We’ve ­increased our digital marketing by 1000 per cent and I still don’t think it’s enough,” he said. “The millennial is coming like a tsunami and we need to be able to deal with that.”