Shift to majority franchise.
Up to 60 Godfreys’ stores will be converted to franchise stores over a three year period. There will be 18 stores targeted for conversion in FY17 with the majority to be converted in H2 FY17 to deliver ongoing EBITDA improvement. The restructuring costs are expected to total up to $2 million.
Godfreys has confirmed that it will continue to own and operate large format ‘superstores’ in key metropolitan markets and major regional cities as corporate stores, while the majority of new store openings will be undertaken as franchises.
Commenting on the announcement, Godfreys chairman Rod Walker said, “Following an internal strategic review to address continued weak performance, the Board has concluded that re-balancing the store portfolio with a bias to franchise stores is the best option to place the business on a solid footing for long term growth.”
“The streamlining of our store portfolio will enable greater management focus on more profitable larger format stores. It will also deliver medium and long term improvements to both profitability and the balance sheet,” he continued.
Godfreys CEO John Hardy added, “Our franchise stores have a track record of outperformance, underpinned by the fundamental driver of small business ownership, particularly in regional areas where local knowledge and relationships are a major element of success.”
“Refocusing the business on a franchise concept will enable Godfreys to accelerate the current business improvement program. We expect strong interest from within our existing team to become franchisees,” he said.
An internal implementation team, led by current CFO Bernie Bicknell has already commenced work to deliver the restructuring strategy and will be subject to a quarterly review by the Board. Bicknell will transition from the role of CFO to lead the implementation project on a full time basis from March 2017.