Retail chief’s bid to beat downturn
HARVEY Norman chairman Gerry Harvey says there is no end in sight for Australia’s economic jitters, but the retail veteran says he can cop a further sales slide as long as his competitors feel it worse.
The 80-year-old said he expected tough economic conditions to continue to dent local sales, which declined 0.9 per cent on a comparable basis over the year, including a dire 1.6 per cent comparable decline in the fourth quarter.
Offshore stores again did the heavy lifting in Harvey Norman’s full-year result released yesterday, with its international segment responsible for a 7.2 per cent profit increase to $402.3 million for the 12 months to June 30.
Total sales increased 12.1 per cent to $2.23 billion as profitability rose 11.7 per cent at the 90 company-operated stores in Asia and Europe, which broke the $2 billion sales barrier for the first time. Mr Harvey blamed a weak economy for the homewares and electronics company’s Australian franchisees recording a 1.8 per cent sales decline to $5.66 billion.
He said it was clear Australia was headed for further economic strife over the next six months.
“I don’t think (the downturn) will be over soon … I think (Australia) is very lucky we’ve done as well as we have done,” he said.
“Yes, it will hurt us, but my ambition is not to hurt as much as the next bloke.” He said the game was to outlast rivals through savvy debt management and strong asset backing as an “inevitable” recession approached.
Debt reduction was the key reason for yesterday’s $173.49 million capital-raising announcement, while the company’s property portfolio rose in value to just under $3 billion to represent 93 per cent of Harvey Norman’s total asset base.
Harvey Norman increased its final dividend by 3c to a fully franked 21c. Its shares dropped by 3.85 per cent to $4.495 in trade yesterday, but were still 22 per cent higher than $3.66 a year ago.
Harvey Norman offered no concrete guidance going forward, but Mr Harvey said local comparable sales picked up by 3 per cent in July and August.
He said the company had begun replicating its successful overseas premium store format in Australia and New Zealand.