“Business is tough, and it has affected our profit, and I am not sure how market conditions generally will be going forward,” Harvey Norman chairman, Gerry Harvey, said in response to the company’s 9.1% drop in sales in the quarter to September 30.
“Nothing on the horizon looks promising,” he told Appliance Retailer, admitting he did not think results would be this bad with all categories affected, compared to a year ago. “Over my lifetime in the industry there has probably been times when retail conditions were maybe similar.”
However, he hopes to sell more air conditioning and outdoor furniture in the coming months if warm weather prevails.
Although foot traffic is down, the cost of running a business is high, and gets higher every year.
“We have stores that do well and others that don’t, but business has always been like that. You cannot operate 250 stores and expect them all to make money.”
And there would be no let-up in advertising for the group that invests heavily in newspapers, radio, TV and sports sponsorships.
Despite consumers facing rising costs, Harvey is banking on a good Christmas to deliver dividends and expects sales to improve in the next quarter.
Looking ahead to next year: “You have to wonder what will happen to make it better, but I think a lot of businesses will struggle in the next 12 months.”
As for Black Friday and other pre-Christmas promotions these are not big money makers, “margins are small which does not help”.