Majors strong, seasonal disappoints, no online impact.
Harvey Norman chairman, Gerry Harvey has confirmed that major appliances and TVs are driving sales growth for the retailer, although there was a downturn in seasonal appliances for the half, which was also echoed in The Good Guys half year sales.
Despite an overall profit drop of 19.3%, profit for Harvey Norman’s company-operated retail segment saw an 11.3% increase and revenue was up 4.5%, while franchisee sales increased almost 5%.
“All of our major categories were good including TVs, washing machines, refrigeration, lounges and bedding. However, we suffered with our fans and air conditioners because we had a ‘boomer’ period in the previous half, and this half, we were down considerably. Despite the warm weather, sales just weren’t there. I would say seasonal was our worst performing category for the half.”
From an international perspective, Slovenia and Croatia total sales were up 3.5%, which Harvey described as a “wonderful result”.
“Our flagship strategy in that market has seen extraordinary success. In Singapore, total sales were up 16.1%, which was an outstanding and Ireland was also good with sales up 17%. We expect our Malaysian flagship to see very strong results in the current half, but so far, sales have been extremely good.”
Harvey does not think retail is any tougher than it has been in previous years. “All of our categories, aside from seasonal, are all tracking along well, particularly in the electrical business. Computers, furniture, bedding and carpets are not doing as well, but nonetheless, sales were up 4.8% and comparable sales for the half were up 4.1%.”
No impact from online businesses
Online players such as Amazon and Kogan may be having an impact on the market, but Harvey said there has been no direct impact on his business.
“We have seen good growth in online sales but it still only represents around 3% of our total sales. Everyone talks about growth in online but they don’t talk about it as a percentage of their total business. But what is an online sale anymore? Customers go on the site to buy but they also just go on to have a look at a product then buy it in-store or go in the store first, then buy online. So it’s difficult to define an online sale.”
Online is just part of the way you need to do business now, he said. “If we didn’t have a website, probably half of our customers would still buy a product in our store, but on the flip side, if we didn’t have the site, many customers would go on to a competitor’s site and never visit our store.”
Responding to speculation about Harvey Norman’s interest in struggling Steinhoff, Harvey said, it was only talk. “If the business was to go up for sale, we would certainly consider it but whether we would do anything, I don’t know about that. And they may not even go up for sale.”