Godfreys Group Limited yesterday announced a full year underlying pro forma net profit after tax (NPAT) of $12.9 million for the year ended 26 June 2015. Godfreys generated an underlying pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) of $22.5 million for the year, exceeding the prospectus forecast of $22.1m.
Sales for the year were $182.6 million, an increase of 5.2 percent over the previous corresponding period, driven by the successful roll out of new products and the company’s store rollout program.
Comparative store sales for the year were flat, which is pleasing given the overall softness in retail sales and deliberate strategy to change the company’s product mix to drive greater sales volume and floor value whilst lowering the average selling price.
The Company opened 12 new stores during the year, closed six stores, and converted eight franchise stores to company-owned stores, taking the total store number to 212.
Godfreys plans to continue its store rollout program in the 2016 financial year and beyond and expects to open about 10 new stores per year to help underpin future growth.
The Board today announced a final dividend of 12.8 cents per ordinary share and a special dividend of 2.6 cents per ordinary share, both payable in October. The dividend payments equate to a dividend payout ratio of 80 percent of the company’s pro forma NPAT, reflecting the board’s intention to achieve a payout ratio of between 70 and 80 percent of the company’s NPAT on an annual basis. The special dividend covers the period from the IPO to 26 December 2014.
Commenting on the result, Godfreys’ chief executive officer, Tom Krulis said, “We are delighted to report our first result as a listed company and to have delivered on our prospectus profit forecasts.
“One of the major themes to emerge during the year is a step change in consumer attitudes towards cleaning, with a much greater focus on ‘convenience’.
Godfreys has positioned itself well to capitalise on this trend by investing heavily in product development targeting a number of innovative new convenience products, which we expect to deliver continued growth.” Krulis said.
He also commented to The Australian’s senior business reporter Eli Greenblat that he “believes a move by Dick Smith and JB Hi-Fi into home appliances, including selling vacuum cleaners, will trigger a price war that will erode industry margins but that his business will defend and maintain profit growth due to innovation, range and new product launches.
“A swarm of retailers from department stores such as Harvey Norman to consumer electronics specialists such as JB Hi-Fi would soon discover they were in the midst of a price war that none of them would win from.
“Vacuum cleaner brand Dyson has been the game changer,” Krulis told The Australian, adding that “as the brand widened its distribution margins would be challenged.
“Dick Smith and JB Hi-Fi have both announced this month they would break into the $1.7 billion home appliances sector by offering a range of products in their stores such as coffee machines, blenders and vacuum cleaners.
“I think it will lead to margin erosion for all those people playing in the identical product,” Krulis predicted.