PwC has confirmed that Godfreys Group’s Australian entity, Vacuum Cleaner Company Limited, has entered voluntary administration.
Stephen White and John Fisk of PwC New Zealand have been appointed voluntary administrators of the vacuum company. Another team has been appointed to manage the Godfreys Group’s Australian entities.
The sudden announcement of the world’s largest vacuum retailers has come as a surprise to many. The company was established in 1931, during the Great Depression, and had survived many storms and battles during its 93 years of operation.
The business operates 141 stores and employs 600 Australians and New Zealanders. It also operated an additional 28 stores run by franchisees.
Administration procedures
The Godfreys business will continue to trade while PwC takes over the reins and restructures operations and sales. However, the administrator says several stores will be closed during this time.
“At this stage, the administrators anticipate that approximately five of these will be company-owned stores in New Zealand,” confirms PwC.
Administrator White says he and his co-administrator Fisk will “continue trading the restructured New Zealand store network” while the administration process takes off. He believes this will maximize opportunities for ongoing sales.
Due to challenging economic conditions, Australian administrator Craig Crosbie says Godfreys’ situation is not unique to the retail industry. He has seen many companies facing the same challenges following the COVID-19 pandemic and its financial ripple effect on the economy.
“Lower customer demand amid cost of living pressures, higher operating costs, and increased competition have all taken a toll on profitability, with some stores more impacted than others,” says Crosbie.
Tough economic battle
The Reserve Bank of Australia (RBA) will meet next week (February 6, 2024). It’s reported that while inflation remains above the RBA’s target area of between 2% and 3%, December figures have thrown a curve.
It’s predicted that the RBA won’t raise interest rates from the current 4.35% when they meet in less than a week.
The Australian Bureau of Statistics (ABS) released trends into recent spending in the retail market during December. It shows that customers spent less in other years.
Retail spending dropped by nearly 3% last month.
‘Fragile’ retail market
ABS head of retail statistics, Ben Dorber, says the significant drop in retail sales in December could be attributed to ‘discretionary spending.’
He says consumers started spending their usual December budgets earlier. By November they spent their money on discounts offered by Black Friday sales.
“This shift in spending from December to November reflects the growing popularity of Black Friday sales. [It also highlights] the impact of cost-of-living pressures. Consumers are seeking bargains and taking advantage of discounts in November,” says Dorber.
On the other hand, retail turnover rose by 0.1% in trend terms. “This shows that underlying retail spending remains subdued when we look through the volatile movements over recent months,” adds ABS.
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