Harvey Norman sales skyrocket

The billionaire co-founder and chairman of Harvey Norman, Gerry Harvey, believes many retailers will go to the wall in the midst of the recession.

Harvey Norman chairman Gerry Harvey. Picture: Richard Dobson

The billionaire co-founder and chairman of Harvey Norman, Gerry Harvey, believes many retailers will go to the wall in the midst of the recession, saying the coronavirus pandemic has probably accelerated the demise of businesses that were weak to begin with.

He said the ills afflicting many sectors of the retail industry were like an “act of God” and that while some categories such as hardware and food might not only survive but thrive, businesses in clothing or fashion had been caught out.

The retail strength of Harvey Norman was put on show yesterday when the chain released its latest trading update, reporting massive sales growth of 17.5 per cent for its Australian stores in the second half.

It also announced a special dividend of 6c per share to be paid at the end of June.

News of the dividend followed its April decision to cancel a ­planned interim payout of 12c per share.

This saved almost $150m at a time when Mr Harvey felt it was prudent to hold on to cash as many believed the world was heading for a depression. The special dividend helped put a rocket under Harvey Norman shares on Wednesday.

It came at a time when many investors hungry for yield are facing slashed or eliminated dividends.

 

Harvey Norman shares ended up 26c, or 7.3 per cent, at $3.81.

Mr Harvey said it was the right time to pay a dividend.

“At the time we cancelled the dividend people were talking about the Great Depression and we were just about ready to pay it, we agreed to pay it, all the events happened and we could have been closed down. We had the money to pay it but we decided not to.

“We had no idea what could have happened and it would have been irresponsible of a board to pay it out.

“I’m in a situation where Katie (CEO Katie Page, Mr Harvey’s wife) and I argue about it at night.

“She thinks it is going to be better and I don’t agree with her but she might be right.

“I don’t think she knows and I’m bloody sure I don’t know.’’

Mr Harvey said many retailers would not survive the recession and economic shocks from the coronavirus pandemic. “Unquestionably some will (fail), but most of the strong ones I would have thought are OK.

“The ones that won’t last are probably the ones that wouldn’t have lasted anyway. Sometimes these things hurry things up a bit.

“If you are in food or electronics you are fine, or like hardware with Bunnings, but if you are in Flight Centre or travel or you are in clothes, shoes and things like that it doesn’t matter how good you are — they have taken a big hiding.

“This is act of god stuff.’’

Harvey Norman’s flagship Australian stores recorded first-half sales growth of 0.1 per cent, rocketing to 17.5 per cent for the second half to date. For the full financial year to date sales for its Australian franchise stores were up 7.4 per cent.

Harvey Norman said government decrees saw many stores across its network in New Zealand, Malaysia, Singapore, Ireland, Northern Ireland and Europe close between March and April. This had an impact on revenue, with sales in the second half to date down 38.2 per cent in Northern Ireland, 21.7 per cent in Singapore, 7.3 per cent in New Zealand, 5.5 per cent in Slovenia and Croatia, up 1.3 per cent in Malaysia and up 25.4 per cent in Ireland.

The special dividend will be paid on June 29 to shareholders registered as of June 23.