Gerry Harvey calls for a little help from above
The co-founder and chairman of Harvey Norman is confident the heavens will deliver, as signs emerge that consumer confidence is rising.
The retailer reported a 4.1 per cent jump in overall sales across Australia in January, with global sales up 3.8 per cent.
This followed six months of weak sales and falling property values, which drove net profit down 36.5 per cent to $81.9 million in the six months to December 31.
Despite the fall, Harvey Norman shares were up 21¢, or 9.21 per cent, at $2.49 on Thursday as the company was more optimistic about its outlook.
Asked what he planned to do to sustain the bumper sales numbers, Mr Harvey said: "Pray."
"It might have more affect than anything else," he said.
Excluding the effect of new stores and store closures, Harvey Norman sales fell 5.3 per cent in the period.
Mr Harvey could not pinpoint why there had been such a turnaround in overall sales in the new year but said he was encouraged by the renewed optimism. "Consumer confidence levels have risen recently and, because of that, you've now got weekly sales in January and February exceeding last year," he said.
"For the first time we've got sale increases for such a long time. It's encouraging that you've just gone [up] two months in a row."
Less encouraging were electronics and technology, which the company said were "challenged" by deflationary headwinds that had affected margins.
Mr Harvey admitted the categories were causing problems but said he had no plans to get rid of them and focus solely on homemaker products.
"We're still persevering in turning them around. We're living in hope and confidence that that'll happen."
Mr Harvey said the retailer expected online sales in technology could account for 2 per cent of total sales this year, "but in the other areas it'll be next to nothing".
He said he expected margin pressures to ease as more retailers shut up shop due to tough trading conditions. "You've had so many retailers go out of business in the last couple of years and there's probably more to go."
The company closed nine stores and opened six new stores in the six months to December.
Harvey Norman declared a fully franked interim dividend of 4.5¢ a share, down from 5¢.
Frequently Asked Questions about this Article…
The company said six months of weak sales and falling property values drove net profit down 36.5% to $81.9 million for the six months to December 31.
Harvey Norman reported a 4.1% jump in overall Australian sales in January and global sales were up 3.8%. Management said rising consumer confidence helped weekly sales in January and February exceed last year’s levels.
Shares rose 21 cents, or 9.21%, to $2.49 on Thursday after the company expressed a more optimistic outlook following the improved January sales and signs of renewed consumer confidence.
Asked how he would sustain the sales lift, co-founder and chairman Gerry Harvey quipped that he would 'pray.' He also pointed to rising consumer confidence as a key reason for the turnaround in weekly sales.
Yes — the company said electronics and technology were 'challenged' by deflationary headwinds that affected margins. Gerry Harvey acknowledged the problems but said the group has no plans to abandon those categories and will keep trying to turn them around.
Harvey Norman said online sales in technology could account for about 2% of total sales this year, while online sales in other areas are expected to be 'next to nothing' according to management comments in the update.
Yes. In the six months to December the company closed nine stores and opened six new ones. Excluding the effect of new store openings and closures, Harvey Norman said sales actually fell 5.3% over the period.
Management is cautiously optimistic: it expects margin pressures to ease as weaker retailers exit the market and cites rising consumer confidence as a positive. Key risks noted in the update include continued weak sales, property-value impacts and deflationary pressure in electronics and technology.
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