No buyer for collapsed vacuum retailer Godfreys leaves creditors $45m out of pocket

The massive $45 million owed to the creditors of collapsed vacuum retailer Godfreys will not be returned after administrators failed to find a buyer.

Godfreys appointed PwC as administrators in January after 93 years in business, blaming a failure to recover from COVID-19 disruptions and dampened consumer spending amid higher cost-of-living pressures.

In a recent report to creditors filed with the Australian Securities and Investments Commission, PwC revealed 26 groups had expressed interest in buying Godfreys and were provided data room access and sales process instructions.

Six indicative offers were received but they were either withdrawn or not sufficient to secure the business’ longer-term future.

According to the report, Godfreys posted a loss of $22.3m in the seven months to the end of January, with the business found to have “been under sales and profit pressure since 2017”.

Creditors — which include vacuum manufacturers Ecovacs, Electrolux and Bissell, as well as landlords — are owed a total of $45.3m, which will not be returned.

Employees may only receive 73¢ in the dollar, while the Australian Taxation Office is owed $883,000.

PwC said Godfreys’ failure was attributed to external factors including supply and price competition across the retail sector, as well as a general downturn in consumer sentiment due to rising inflation and finance costs.

There was “inflationary factors causing greater costs to acquire stock and operate the business” and “increased exposure to declining financial performance of retail stores by acquiring franchise stores, thereby magnifying losses”.

Losses were also exacerbated by the acquisition of 36 franchise stores since the 2021 financial year, worth a combined total of $27m.

From July 2023 to the end of January, these stores only generated about $1m in earnings before interest, taxes, depreciation, and amortisation.

Established in 1931, Godfreys was one of the world’s largest vacuum retailers and a supplier of specialty commercial floor care and associated cleaning products.

Godfreys operated 141 stores and employed more than 600 staff across Australia and New Zealand, with another 28 stores run by franchisees.

Most continued to trade when administrators were appointed at the end of January, but 54 closed the following weeks, resulting in about 200 staff in Australia and New Zealand being laid off.

Administrators began a phased wind down in mid-March, with all stores closed by the end of May.