“The New Zealand business has generated losses over recent times and was heavily reliant on funding from Australia. And in turn the Australian business was heavily reliant on funding from its secured lenders.”
White said costs had generally been going upwards over recent years, while consumer shopping behaviours had changed.
“Online is a bit more prevalent now which creates pressures for bricks-and-mortar-type businesses,” he said.
No financial details of money owed to creditors or staff are available at this stage, as the administrators continue to work through the numbers.
“They [staff] will have some holiday pay built up, but we don’t know quite how that’s going to be dealt with at this point in time. Ultimately that will be determined by the outcome of the administration process,” White said.
“In terms of other creditors of the New Zealand company you’ve got some suppliers, the Inland Revenue and there’s quite a material owing back to the Australian group.
“Also the New Zealand business sources most of its inventory from the Australian company.”
White said five company-operated stores in New Zealand have been closed down since Tuesday’s announcement, affecting about 22 people.
“They’d all been identified at the outset as stores that had been loss-making over recent years and probably had viability issues,” he said.
No redundancies have been made yet, however, White said.
“It’d be nice if they could be redeployed but in reality I think unfortunately there probably are going to be redundancies,” White said.
The remaining 20 stores in New Zealand, of which nine are franchises, are still open for business, he said.
“We’ve got no intentions of closing any other New Zealand stores at this point in time.”
Expressions of interest for the business, which is being sold as a going concern, are already under way.
“I understand they’ve had quite a lot of interest,” White said.
The sale process is likely to take six to eight weeks and is being run by PwC out of Australia, he said.
“We’re confident at this point in time that the restructured business will be attractive,” he said.
“With the store closures that we’ve implemented this week both here and in Australia, we believe it should put it back onto a profitable footing.”
Lifeline for affected staff
A local cleaning rival is offering displaced Godfreys Group staff free franchises worth up to $35,000 each.
“Normally our franchises cost between $25,000 to $35,000, but we want to help the staff at Godfreys and offer them an opportunity to stay in the industry and earn more money,” said Haydar Hussein, founder and head of Jim’s Cleaning Group.
Jim’s Cleaning is part of the Jim’s Group, which includes mowing, fencing, dog wash, handyman and tree services.
“We have work ready for them and we can get them set up and started almost immediately. This is the perfect win-win outcome for everyone and it will enable the staff at Godfreys to secure a new future for themselves,” Hussein said.
The franchise businesses come with all the training required which they will need to attend and pass, a personal mentor and business coach to support them, Hussein said.
He said staff would only have to front basic start-up costs, which included consumables such as uniforms, equipment and chemicals.
“We can’t keep up with all the cleaning jobs coming into our business, so to have more franchisee businesses on board taking on the growing amount of work would be a great outcome for everyone,” Hussein said.
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports.
