Shares of Godfreys Group Ltd (ASX: GFY) have been hit hard today, falling 8.6% to 96 cents after the retailer announced the resignation of its CEO Kathy Cocovski, citing 'personal reasons'.
What makes matters worse for the group and its shareholders is the fact that Ms Cocovski lasted less than six months in the role. She began as CEO on 27 January this year after the group's previous CEO, Tom Krulis, was shown the door due to the group's poor financial results.
Familiar to many homeowners, Godfreys Group is a retailer that sells vacuum cleaners and other floor-cleaning products.
Despite its expertise in that market, the company failed to adequately adjust to changing consumer trends by sticking to barrel vacuum cleaners rather than shifting towards 'stickvacs'. This allowed other competitors such as Harvey Norman Holdings Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH) to steal some market share, whilst also negatively impacting Godfrey's sales.
When Ms Cocovski took over as CEO, it was hoped she could improve the company's operating performance. While the company today noted that: "(Cocovski) has made significant inroads in making the fundamental changes Godfreys needs to set a course for improved long term performance," investors may have their doubts.
Indeed, change of leadership twice in six months is rarely a good indicator, as shareholders of iSelect Ltd (ASX: ISU) have also discovered.
John Hardy will become the interim Managing Director in light of Cocovski's departure. Hardy has spent several decades in senior management positions at Godfreys, while he has also served as a director for a little over three months.
Despite the company's reasoning for Cocovski's resignation, investors still have reason to be cautious of the group's shares in case there are deeper problems in Godfrey's business that the company isn't letting on to. What's more, the group's sales could also be susceptible to a potential downturn in the economy, which investors should also keep in mind.
