John Hardy, the new boss of vacuum cleaner retailer Godfreys, has a pointed opinion on the value of good customer service, reports an article by Simon Evans in the AFR on 5 September.
The 73-year-old retailing veteran predicts the limited service available at other big electronic retail stores will bring people back to Godfreys, with his rivals selling vacuum cleaners at very low margins. Customers want to see what a cleaner can do. “They won’t turn it on, they won’t put dirt in it,” he says of his competitors.’
But for investors in Godfreys, writes Evans, another sharp leg down in the share price since the full-year results on August 26 is proving problematic. The stock was at $1.23 on August 25 and has fallen to 84¢. Contrast that with the issue price of $2.75 when Godfreys floated on the ASX in December, 2014.
‘Hardy said it would take time for improvements in the product range and in staff training to flow through to the bottom line. “There’s been a few issues in the business and we’re correcting those,” he tells The AFR. “My job as I see it is to restore performance and the share price will look after itself.’
“I can’t tell you how long it is going to take. There is no short cut to this”. But he says a full turnaround at Barbeques Galore, which was in much worse shape after it had hit the skids, had taken two years. “It was minutes to midnight for them.” One thing he won’t be doing at Godfreys is discounting. “You get on that drug and it’s pretty hard to get off,” he says.
Godfrey’s full-year results on August 26 showed just how much the business had been floundering, Evans reports, with like-for-like sales having tumbled 9.7 per cent, which the company blamed on ‘poor execution’ of Godfreys’ response to a key market trend. ‘That trend was the big shift among consumers to buying stick vacuums, which appeal to apartment buyers and the fashion-conscious.’
‘Harvey Norman and JB Hi-Fi have expanded their ranges in vacuum cleaners and stolen market share from the Godfreys core business. Harvey concedes that previous Godfreys management missed the stick-vac trend. “We do think we missed the boat”,’ states the article.