Godfreys Group Ltd (ASX: GFY) recently released its 2015 full year results. Here's what you need to know.
Godfreys is a retailer of domestic and commercial floorcare and associated cleaning products in Australia and New Zealand. It offers a range of company-owned brands (including Sauber, Wertheim and Pullman), licensed brand (Hoover) and third party brands (such as Bissell, Miele and Electrolux).
The company operates a total of 212 stores of which the majority are company-owned and 85 are franchised. Stores are located in shopping centres and retail shopping strips, as well as stand-alone superstores.
Godfrey's 2015 full-year highlights included:
- Full Year Sales of $182.6 million (up 5.2% on pcp)
- Underlying Pro Forma EBITDA of $22.5 million (up 13.2% on pcp)
- Underlying Pro Forma NPAT of $12.9 million (up 18.8% on pcp)
- Total store numbers of 212, including 12 new stores opened and 8 franchise stores converted to company-owned stores
- Strong cash generation
Godfreys, which listed on the Australian share market in December 2014, announced a partly franked final dividend of 12.8c a share plus a special 2.6c dividend.
So What
Increased revenue has been 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.
Godfrey's opened 12 new stores during the year, closed 6 stores, and converted 8 franchise stores to company-owned stores, taking the total store number to 212. Godfreys plans to continue its store roll-out program in the 2016 financial year and beyond and expects to open approximately 10 new stores per year to help underpin future growth.
Commenting on the result, Godfreys' Chief Executive Officer, Mr Tom Krulis said: "We are delighted to report our first result as a listed company and to have delivered on our prospectus profit forecasts".
What now
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 heavily investing in product development targeting a number of innovative new convenience products, which they expect to deliver continued growth.
The company launched a new store format called 'We are clean' in its Traralgon store in Victoria during the period and all new stores and store refurbishments will adopt this design.
Godfreys also opened a new 12,000sqm distribution centre in Altona, Victoria in May 2015, doubling its warehouse capacity.
Verdict
Dick Smith Holdings Ltd (ASX: DSH) and JB Hi-Fi Limited (ASX: JBH) 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.
In response to this, Godfreys' Chief Executive Officer, Mr Krulis said, "I think it will lead to margin erosion for all those people playing in the identical product".
While Godfreys has posted growing earnings per share and strong cash flows for the past three years, its net profit margins are very thin. That's why, I'll wait to see what impact Dick Smith and JB Hi-Fi have on Godfreys' margins before I can consider it a 'buy'.
