Harvey hints at lower results, warns of tougher times ahead

By Chris Nicholls

SYDNEY: Gerry Harvey has warned investors to expect lower numbers when Harvey Norman’s quarterly figures come out tomorrow, saying things have “not been easy”.

In an exclusive interview with Current.com.au, Harvey said sales over the six months to June would not compare well to those of the recent past.

“Business is not that easy at the moment, as you well know. So trying to get our sales has been not as easy [as in the past]. July to December was pretty good. January to June is not going to be nearly as good,” said Harvey.

“Every retailer’s got a problem at the moment. Everyone’s doing the best they can.”

Harvey’s comments come in stark contrast to those he made in January, when he told Current.com.au that "everything in the marketplace is very strong", and predicted strong retail spending would continue into 2008. 

Despite his warnings, though, Harvey stopped short of calling the current economic climate ‘tough’, hitting back at retailers who claimed things were bad.

“It’s not what I’d call a real tough period. We’ve been in the middle of a boom, so we’re back off the boom. At the moment, we’ve got high levels of employment, higher than ever, wages high or higher than ever, you’ve got tax cuts coming in from 1 July, so we’re not in a tough period.

“But people who have had such a good time all these years are saying ‘This is tough’. Bull****. It’s not tough at all. It’s tougher than it was, but you’d have to say it’s relatively easy. It might be tough for a few people, but the greater majority of people are not having it tough at all,” Harvey said.

Showing little sympathy for those who were struggling now, Harvey said the future did look tougher and those struggling now would be in real trouble if conditions did worsen.

“We’re going through a stage at the moment where interest rates are not going to drop and there’ll be pressures on out there that were not there before. There’s not outlook at the moment [that says] ‘Oh gee, things are going to get better next month’. They’re not. They’re going to stay the same or get worse, I’d say.

He said “if interest rates went up another two per cent, and unemployment went to nine per cent” things would get truly tough.

“We’ve been up above 10 and 11 per cent unemployment plenty of times over the years, and that’s the time that unless you’ve got a very good business, you won’t survive. That’s when everyone starts going broke. But that’s not now. If you’re going out of business now, pity help you if it does get tough.”

Harvey did admit interest rises had made things tough for customers, though, especially those with mortgages, but he reiterated his point made in January that only a sixth of Australians have mortgages.

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