Godfreys’ failure to quickly catch onto the stick vacuum craze has cost the retailer its chief executive and a chunk of profit.
Unaudited figures show a sharp decline in the retailer’s half year profit because the vacuum cleaner specialist was slower than its competitors to stock a variety of stick vacuums.
The error forced Godfreys to slash its full year profit forecast and led to the departure of chief executive Tom Krulis.
Spooked investors drove Godfreys share price down by 28 per cent to record lows as the news broke on Wednesday.
Chairman Rod Walker blamed the company’s woes on its failure to capitalise on a key market shift away from traditional barrel vacuum cleaners to stick vacuums, also known as stickvacs.
He said Godfreys was aware of the trend but had underestimated how quickly stickvacs would take off and was slow to stock the range customers wanted.
“We identified about 12 or 15 months ago that there was a move (towards stickvacs),” Mr Walker told reporters.
“We certainly knew a change was coming. We just did not realise it would be so significant so quickly.”
For the first half of 2015/16, Godfreys expects its profit to fall by up to a third to between $4.3 million and $4.5 million.
Unaudited figures released by the company show that comparable store sales dropped 5.2 per cent in the six months to December 30.
The retailer has cut about $4 million off its full year profit guidance and now expects a result of $12.9 million to $8.5 million.
Mr Walker said Godfreys now had the range shoppers were demanding and was confident that a change in leadership would prevent similar mistakes in future.
Former Woolworths and Myer executive Kathy Cocovski will replace Mr Krulis from January 27.
Mr Walker said Ms Cocovski had the skills to deal with the business’s operations, while Mr Krulis would take on a part-time role covering product development and innovation.
“Kathy has tremendous operational experience. She has a real focus and passion for operational detail and people performance and they are the areas that are not Tommy’s greatest strengths,” Mr Walker said.
Ms Cocovski has 30 years of retail experience including 20 years at Myer. She has also held senior roles at Big W and Just Jeans.
Shares in Godfreys dropped 45 cents to close at $1.14.
The retailer listed on the share market in December 2014 after selling investors shares priced at $2.75 each.