Godfreys made a reasonably solid listing on the Australian Securities Exchange, with its opening trades at a 3.6 percent premium to the $2.75 per share offer price. In the public float, it was sold at a multiple of just under six times EBITDA. With what it perceives to be a relatively ‘recession-proof’ business, management is confident of the organisation’s financial future.
The retailer is forecasting sales revenue to rise to $185 million in 2014/15 from $173.5 million in 2013/14. Net profit after tax is forecast to rise to $12.2 million in 2014/15 from $10.8 million.
Godfreys largest shareholder is 96 year old John Johnston, one of the business’s pioneers who first joined the company in 1936. His Arcade Finance Pty Ltd investment vehicle holds 20.2 per cent of the company.
Godfreys, which initially set out to raise up to $103 million, downsized the float to $78 million in early November. It has 209 retail outlets in Australian and New Zealand and is claimed to have a 27 percent marketshare by volume of the $1.3 billion vacuum and cleaning products market.
Investment banks Nomura and Investec exited in the Godfreys float as they quit both their equity stakes and shareholder loans. Investec had been a stakeholder since 2012 while Nomura was part of the group alongside Johnston who acquired the business in 2011.
“They were able to pick it up for a steal after things went awry because of the high debt levels it was labouring under when previous owners, private equity firms PEP and Unitas Capital owned the business,” noted a Sydney Morning Herald Business story by Simon Evans and Patrick Commins (11 December 2014). “PEP and Unitas bought it for around $300 million in 2006, just before the global financial crisis hit in late 2007.”
Robots trending upwards
According to an 11 December 2014 report by The Australian’s senior business reporter Eli Geenblat, Godfreys CEO Tom Krulis believes his company can “cash in on festive spending this year as demand surges for robot cleaners.
“If you give your husband or wife a vacuum cleaner for Christmas, they will probably throw it at you — it’s not a great strategic move — but what has changed that is the robot,” Krulis is quoted as saying.
“It’s cool to give robots for Christmas, a bit of an act of love — ‘If I buy you a robot, I don’t want you to clean’ — it’s a bit of a novelty. We have a very big robot range this year and we are selling large volumes.”
Referring to the Godfreys listing that saw just 852,631 shares traded of 28.2 million shares issued in the float, Krulis commented, “Generally I don’t think there were a lot of people who wanted to sell, and I think the exciting thing for us is that the people who have backed us are there for the long haul, not for the short haul.”
He also believes that Godfrey’s should perform well through the economic cycle. “There is 100 percent market penetration in households. If the vacuum breaks down you don’t wake up in the morning and think ‘I can do without a vacuum cleaner for next month’.”