Sales growth lifts Harvey Norman chief
Retail mogul Gerry Harvey says the worst trading conditions he has seen in more than half a century of business might have bottomed, as his furniture and electricals chain Harvey Norman registered its first quarterly sales growth in nearly two years.
"From memory this is the first time we have been up for three years," Mr Harvey said.
Despite TVs and computers still being the Achilles heel of his retail chain, suffering from continued sharp price deflation and shrinking sales revenue, Harvey Norman was recording better growth from its other departments, such as home appliances, furniture and bedding. Harvey Norman on Wednesday said third-quarter sales rose 0.6 per cent across its operations, while like-for-like sales increased 2 per cent.
Its Australian store network, the bulk of the Harvey Norman retail empire, recorded its first positive sales lift since the fourth quarter of 2011 and the first positive like-for-like quarterly sales growth since the first quarter of 2011.
But the executive chairman of Harvey Norman, who began working in the retail sector 50 years ago, warned retail conditions remained fragile, creating a tough environment the likes of which he had never seen.
"Our sales have been going down, down, year after year," Mr Harvey told BusinessDay. "That has never happened to us before - I've been in business for over 50 years and I have never gone through something like this.
"I've been through stages in one year when my sales have gone down but I've never been through two years and this might be three years."
Mr Harvey said consumer confidence remained stubbornly low, with poor support for the Gillard government worsening the situation for shoppers and retailers.
"You've got 30 per cent of people supporting a political party and that's pretty much as low as it gets," he said. "That means 70 per cent of people are maybe not voting for them and so seven out of 10 people are not happy with whoever is governing them - that can't be good." The mood was starting to change but it was not anything to get "wildly excited" about yet, said Mr Harvey.
"You have got signs over the last few months ... that there is a bit more talk we have reached the bottom, plateaued, and now there are signs we are on the way up."
Further signs on consumer confidence will follow on Thursday when Wesfarmers releases quarterly sales for Coles, Target, Kmart, Officeworks and Bunnings.
Harvey Norman's Australian operations posted a 0.1 per cent increase in total sales and were up 1.5 per cent in same-store sales.
"Right across the board our sales are good but they have declined dramatically with TV and computers," Mr Harvey said. "If we had never been in computers or TVs we wouldn't have had anything like this decline we had.
"So now for us to be up a little bit in the quarter means the rest of the business has picked up the slack."