By Craig Zammit
SYDNEY: Harvey Norman has back-flipped on the sale of its Ariston appliances distribution business after funds were received from its Italian parent company to stick with the business which has struggled to generate serious profit since 2000.
With increased Chinese competition and high warranty costs eating away at Ariston’s profit margin, it had been strongly tipped that Harvey Norman Holdings would sell its 51 per cent controlling interest of the appliance brand, but with fresh capital injected into the brands’ Australian business, Harvey believes that sweet lemonade can still be squeezed from this whitegoods lemon.
“Why would I sell something if I could squeeze more out of it?” Harvey said in an article published by today by The Australian Financial Review.
This tune plays out much differently now than it did in early February this year, when Harvey suggested the Ariston business was difficult and stated he was happy to sell Ariston because “it is not our core business”, saying that the business had “never contributed anything in the way of profit.”
However with a new range of products now ready to launch and a cash-injected advertising campaign at the ready, Harvey believes that at least “a 20 per cent increase in turnover” is now likely.
“If that doesn’t translate into a better increase in earnings we’d be pretty surprised,” he said.
The new Ariston product range will include integrated refrigerators, bar fridges and chest fridges to complement its existing range of cooktops, rangehoods, ovens and dishwashers.