Vacuum cleaner chain Godfrey's has warned an ongoing decline in its sales will likely lead to its full-year earnings landing at the lower end of its forecasts.
The struggling retailer said the challenging trading period it had expected in the second half has materialised.
In an update on Monday Godfrey's said it expects its 2016/17 underlying earnings before interest, tax, depreciation and amortisation to be at the lower end of its $14 million to $15 million guidance range given earlier this year.
"While the updated guidance reflects a decline in same-store sales in the second half, these have stabilised and are showing signs of improvement," a statement from Godfrey's said.
Godfrey's made a $21.7 million first-half loss following writedowns of $24 million and a seven per cent decline in same store sales.
The company has previously admitted its late adoption of stick vacuums was an important trend it missed which had cost it sales.
It said the conversion of company-owned stores to franchise stores is progressing well with the rollout plan ahead of target and expected to lead to higher franchising licence fees this financial year.
Managing director John Hardy said the company was focused on adjusting product mix, improving sales operations and store composition.
"We expect these changes will improve our competition position although the benefits will take time to be realised," he said in a statement.
The company has refinanced to a long term $30 million debt facility which it said has more favourable commercial terms than what it previously had with the Commonwealth Bank.
Shares in Godfrey's closed 8.8 per cent higher, or 5.5 cents, at 68 cents - a one-month high but a long way from its 2014 initial public offer price of $2.75 a share.
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