Retail sales freefall slows on the Harvey’s Sales Index

By Martin Vedris

SYDNEY: The weekly retail sales report from Harvey Norman, published on the Australian Stock Exchange website, reports a slowing of the previous two weeks of consecutive 3.6 per cent sales declines.

The report, posted today and attributed to the company chairman Gerry Harvey, states that, “Like for like written sales for the 28 days ended 2 November 2008 from the franchised ‘Harvey Norman’ stores in Australia decreased by 0.6 per cent when compared to the same period last year.”

The report last week announced that sales for the 28 days to 26 October were down 3.6 per cent on the same period last year. And the week before the report stated that sales for the 28 days to 19 October were down 3.6 per cent on the same period last year.

This weekly sales report shows possibly some upside to the fears of a consumer retail slowdown amidst reports of an impending recession.

Other good economic news that could help consumer sentiment is that the Reserve Bank is expected to deliver yet another cut to interest rates today with an anticipated 0.5 per cent cut in the official interest rates. The Reserve Bank Announcement is expected today 30 minutes before the Melbourne Cup at 3 pm.

Also, petrol has dropped to an average price of $130.5 cents per litre in Sydney today, down from a 12 month high of 171.3 cents per litre on 10 July this year (source: www.motormouth.com.au).

Harvey Norman shares closed at $2.70 at the end of the day’s trading yesterday but were up 20 cents by midday today — the shares were trading at over $6.50 in January this year.

While the news of the slowing in the retail sales decline is some good news, Gerry Harvey warns today, “Retail margins continue to be under pressure”.

Harvey Norman is reporting its weekly sales because it says that “the company hopes to give guidance as to what is really happening out in the retail market. There are Harvey Norman franchised stores in every state and town of any significance in Australia. Sales turnover for the franchised ‘Harvey Norman’ stores in Australia is indicative of retail market conditions in Australia.”

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