Despite a decline in sales, Harvey Norman chairman Gerry Harvey is more positive today than he was six months ago.
Speaking to Appliance Retailer, following the release of half yearly results for the six months to December 31, which showed a drop in stores sales from $4.98 billion to $4.64 billion, he expects sales will pick up going forward as new product arrives in the lead up to the latter part of the year. “That will be the big game changer, but no one knows exactly what that will be although artificial intelligence has the potential to be a world game changer.”
Profit before tax (PBT) was down 45.7% to $283.58 million compared to 1H23. In Australia, the franchising operations segment PBT result declined 39.8% to $143.08 million. Australian franchisee sales decreased by 9.7% to $3.16 billion compared to the previous corresponding period.
Franchisee sales recovered through the second quarter of the trading period in the lead up to Christmas and were assisted by an improvement in seasonal sales.
According to Harvey, bedding, electrical and bathroom has been under pressure, but sales improved in the past couple of months and the retailer is well positioned to benefit from growth in the homemaker categories and an improvement in residential property activity. “Computer hardware sales are suffering following the boom during the pandemic, but this could correct itself depending on the new product, but it has to be better and if that happens people will buy it.”
He said online sales are holding steady.
Overseas sales were impacted by the macroeconomic headwinds in New Zealand that continue to dampen consumer confidence while ongoing inflationary pressures and political tensions in Asia and Europe have decreased store foot traffic and homemaker spending.
There are challenges facing the local retail landscape with prices, utilities, wages, power, interest rates and rents all going up with no signs of them coming down. “Interest rates could fall, but where it all lands, everyone has an opinion on that. The cost of doing business is horrendous and a lot of retailers are operating under extreme pressure,” Harvey said.
Harvey Norman shares went up following the better-than-expected drop in earnings.
The latest ABS figures, also released today, show Australian retail turnover rose 1.1%, seasonally adjusted, in January 2024. Clothing, footwear and personal accessory retailing had the largest rise of 2.4%, followed by household goods on 2.3% and department stores 1.7%.