Sales uptick cheers Harvey Norman chief
"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 its retail operations - 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've 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."
Frequently Asked Questions about this Article…
Harvey Norman reported third-quarter sales rose 0.6% across its operations while like‑for‑like sales increased 2%. Its Australian operations posted a 0.1% increase in total sales and a 1.5% rise in same‑store sales.
Yes — the company recorded its first quarterly sales growth in nearly two years and Gerry Harvey said this is the first time they've been up for three years, with the Australian store network seeing its first positive sales lift since late 2011 and first positive like‑for‑like quarterly growth since early 2011.
TVs and computers are the Achilles' heel for Harvey Norman, suffering from sharp price deflation and shrinking sales revenue according to the article.
Growth came from other departments such as home appliances, furniture and bedding, which helped pick up the slack from weak electronics sales.
Gerry Harvey — with more than 50 years in retail — described current trading conditions as the worst he's seen and warned they remain fragile; he also noted consumer confidence is stubbornly low and suggested political sentiment may be weighing on shoppers.
Wesfarmers' quarterly sales for Coles, Target, Kmart, Officeworks and Bunnings will provide a broader read on consumer confidence and whether the retail recovery Harvey Norman is seeing is industry‑wide or company‑specific.
The article says sharp price deflation in TVs and computers has reduced sales revenue in those categories, meaning the overall decline would have been less severe if Harvey Norman hadn't been exposed to those electronics segments.
Investors should monitor whether growth in home appliances, furniture and bedding is sustained, track same‑store sales trends, watch upcoming retail reports (such as Wesfarmers') for signs of broader consumer recovery, and note Gerry Harvey's comments about whether conditions continue to move from bottoming and plateauing toward a sustained upturn.
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