After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories \u2014 from the trading floor to the dealer\u2019s desk.
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A headline came through in the week, saying that the 100-year-old Godfreys had gone bust.<\/p>\n
This headline was something that was not a surprise to me in the slightest.<\/p>\n
What they were offering was what we used to term a \u2018Mono Offering\u2019 \u2013 plus they had no \u2018moat\u2019 around their \u2018one product\u2019 offering.<\/p>\n
If you ask anyone aged 30 or under, they wouldn\u2019t know what the name Godfreys meant or stood for.<\/p>\n
Imagine that. <\/p>\n
The young adults can go into any Kmart or Big W and buy a vacuum cleaner along with an air fryer, a set of bath towels or some jocks and socks.<\/p>\n
Nip into a Godfreys and all you can buy is a, um\u2026 vacuum cleaner.<\/p>\n
If they managed to up sell you a Dyson, they would never see you again, as Dyson will replace most parts for free and via the post.<\/p>\n
Who remembers the good old days, when Mum would send you down the road to buy a dust bag for her Hoover and you were faced with a wall of offerings and all different bag sizes.<\/p>\n
Come home with the wrong bag and no matter how much squeeze, effort and cardboard cutting you put in, it would never fit unless you got the exact model number for that particular Hoover.<\/p>\n
Later in life James Dyson solved this problem with his bagless offering and for that my therapist and I are truly grateful.<\/p>\n
Mind you Dyson had to do 1,308 presentations before he found a backer for his idea. <\/p>\n
They all said, \u2018well if it is that good an idea, Hoover would be doing it\u2019.<\/p>\n
He is now one of the richest men in the UK.<\/p>\n
So, the vacuum bag was a \u00a3100m a year industry in the UK and probably something that Godfreys handsomely profited from in the \u201960s, \u201970s and \u201980s.<\/p>\n
But in the words of Bob Dylan, times are a changin\u2019, and a few people seemed to have missed this \u2018Kodak Moment\u2019, probably because they were too close.<\/p>\n
Even in this day and age of Google, Yellow Pages books are still getting printed and handed out to households, who just put them into the recycling bin as the rivers of gold revenue that they once enjoyed shift from print to online.<\/p>\n
Yet they don\u2019t give in.<\/p>\n
Please stop. Thank you.<\/p>\n
My recycle bin is full.<\/p>\n
Who knows, one day even the ASX may allow the shifting of paper based registrar information to go online. After all, the CHESS settlement system was only introduced in 1987.<\/p>\n
I\u2019ve gone through about five postmen, who have given up struggling to fit all of my CHESS statements into my letterbox (which arrive on an almost daily basis).<\/p>\n
That\u2019s why my recycle bin is full.<\/p>\n
So, you get my drift. <\/p>\n
Some old industries just find it hard to pivot when they come across a change in the wind and they just die on the vine. This is what happened to Godfreys.
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The greatest ever pivot was Nokia, changing from a manufacturer of wellington boots to a manufacturer of mobile phones, in 1990. (Ring ring, give me a boot.)<\/p>\n
The worst non-pivot in the world (worse than Godfreys) was Kodak, as even though they were given the chance to go digital very early on, they told the young inventor to piss off<\/a>.<\/p>\n \u2018We sell cameras, chemicals and print machines,\u2019 they told him. In 2012, Koday filed for bankruptcy.<\/p>\n Going back to Godfreys and when you are a Pom arriving to settle down in Australia, names like Harvey Norman (one tight geezer trying to be with it, the other one on holiday), Godfreys (comb-over man), Joyce Mayne (annoying voice), Dick Smith (old geezer wearing thick glasses) etc, mean absolutely nothing to you.<\/p>\n\n Well, actually, the Godfreys TV ads in the \u201990s reminded me more of the guy who appeared in the UK adverts for Hamlet cigars.<\/p>\n\n The only time us Poms came across the name Godfrey was in the TV comedy Dad\u2019s Army<\/a> and even in the show, he was portrayed as being old and asleep, so when the Godfreys adverts came on I just assumed, in my head, that it was his son\u2019s company.<\/p>\n So, the history of Godfreys (the company, not the old Dad\u2019s Army geezer), goes back to 1931 and when the founder Godfrey Cohen passed away in 2004, private equity came in. In 2006 it bought out his estate and everyone else involved, for $300m.<\/p>\n They then listed it on the ASX in 2014, having geared it up to the hilt and creamed off massive fees (getting a whiff of Dick Smith here?) at $2.75 a share and they managed to hit a low of 21c, before being taken private in 2018, in a deal worth $13.7m.<\/p>\n After this week\u2019s news, the company\u2019s net worth is now about the same price of a pair of old Nokia wellington boots on eBay, which is a shame.<\/p>\n However, Godfreys directors won\u2019t be the last ones to not see the writing on the wall.<\/p>\n Though, even when listed, they blamed their current TV campaign for two profit downgrades in two months. They obviously thought a baldy comb-over man was their main selling point in 2018.<\/p>\n Moving forward, all I can say is, try not to lose your pants if holding any Step One ASX shares, as their latest pivot is to go from \u2018mono to stereo\u2019 as they now offer womens briefs as well as mens boxer shorts.<\/p>\n However, they did get to mention AI in their latest trading update, so everything is alright then.<\/p>\n Maybe AI can produce an elastic that won\u2019t let them fall down on you or your portfolio.<\/p>\n Now, just to prove the point of this penned piece, I\u2019m going to pivot live and in real time from a glass of NZ Sauvignon Blanc to a glass of soft basket pressed Mudgee Shiraz, whilst I write a memo to all my company directors that simply states:<\/p>\n \u201cIf I can pivot, so can you.\u201d<\/p>\n The Chairman.<\/p>\n \u00a0<\/p>\n The Secret Broker can be found on Twitter here\u00a0@SecretBrokerAU<\/a>\u00a0or on email at\u00a0thesecretbroker@stockhead.com.au.<\/strong><\/em><\/p>\n Feel free to contact him with your best stock tips and ideas.<\/strong><\/p>\n <\/span><\/p>\n The post The Secret Broker: When it pays to be a sucker for a good pivot<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"