Home spending trend is Harvey Norman’s friend as sales surge

The COVID-19 pandemic continues to funnel consumer spending into home ­appliances and white goods as Australians spend more time at home.

Gerry Harvey: COVID-19 pandemic continues to funnel consumer spending into home ­appliances and white goods. Picture: Richard Dobson

Harvey Norman is continuing to see strong sales throughout its stores in Australia and overseas as the COVID-19 pandemic funnels consumer spending into home ­appliances and white goods as they spend more time at home.

In its annual report, the retailer said the continued impact globally due to the fast evolving COVID-19 remains unknown. But there were effects on consumer spending habits that had now become a major trend across its stores in Australia, New Zealand, Southeast Asia and Europe.

“To date, the biggest consumer change we have seen in our eight countries is the elevated importance of family, home, work and study from home, cooking and entertainment from home. Our brands are well placed to take advantage of this trend,” Harvey Norman executive chairman Gerry Harvey and chief executive Katie Page said in their report to shareholders.

Sales had continued to climb in the start of the 2021 fiscal year.

“The sales uptick we saw in the last quarter in Australia accelerated in July and has continued in August and September — notwithstanding the metropolitan Melbourne government mandated stage-four lockdown.

“Within our company-operated stores overseas, sales improved quickly as they reopened to the public following government-mandated closures. This improvement continued into the Sep­tember quarter, notwithstanding the New Zealand government lockdown of metropolitan Auckland from August 11 to August 30.”

Last week Harvey Norman revealed the strength of the sales boost heading into the first quarter of the current fiscal year when it reported that sales surged 30 per cent for the 11 weeks to mid-September, as consumers splashed out on white goods, TVs and even bedding — as spare cash that traditionally would have gone into holidays and going out went to other discretionary goods.

At the time, Mr Harvey welcomed the sales leap as the best sales performance he had seen in 60 years of business.

“This is my best sales in my lifetime and I have been doing this since 1959,” he told The Australian last month. “It’s the best sales in over 60 years, not just in Australia but in our stores right across the world. For me that is terribly important. Human behaviour has been identical in all the countries we have stores.’’

The annual report discloses that Mr Harvey’s total remuneration last financial year was $858,953, flat with the previous year, while Ms Page’s total remuneration increased to $3.32m, from $3.03m. For 2020, Mr Harvey did not receive any short-term performance cash incentives, while Ms Page had a short-term cash incentive of $998,073.

The annual report also disclosed changes made by the board’s remuneration committee to the benchmarks needed to be cleared for executive directors to earn their short-term incentives.

These alterations included profit after tax adjusted for the after-tax impact of property revaluations to be the measure used for the achievement of the financial conditions for the short-term incentive, replacing earnings per share. Harvey Norman holds $3bn worth of property and the valuations of the sizeable bricks-and-mortar investment can have a huge impact on the retailer’s annual profitability.

The Harvey Norman annual report also disclosed that the short-term incentive pool was increased to $3m, from $2.8m, in line with the increase in net assets of the company over the previous two financial periods.

Mr Harvey holds 392.38 million shares in Harvey Norman and Ms Page holds 19.77 million shares. Combined, the couple’s shares are worth about $1.89bn.

Harvey Norman shares fell 0.9 per cent to $4.55.