Retail ‘best in 60 years’, as Harvey Norman sales surge spills into 2021
Harvey Norman’s co-founder says retail ‘has never been as good’, with profits and dividends rising, but he’s not repaying JobKeeper.
Veteran retailer Gerry Harvey believes he is witnessing the best retail conditions in his 60 years of selling products to the public, as he again refused to pay back more than $3.6m in JobKeeper funds back to Canberra, calling it a “tiny amount”.
Mr Harvey said Australia was in a purple patch of the best retail performance he had seen since starting out in the 1950s, while Harvey Norman also continued to invest in property as well as shares — with the group buying up big licks of BHP shares, which he said was one of his best sharemarket tips in recent years.
In the shadow of Harvey Norman’s bumper December half performance, the issue of JobKeeper funds continues to be a contentious one.
Harvey Norman had already pocketed around $22m from the JobKeeper program, with some of its offshore operations also taking in government wages subsidies, but Mr Harvey has repeatedly avowed not to hand back the funds but rather tip money into the Treasury’s coffers through much higher taxes.
Mr Harvey again repeated that position on Friday when Harvey Norman was revealed to be one of the biggest winners this reporting season from the consumer binge experienced through the pandemic. The consumer electronics, furniture and bedding giant posted a 116.3 per cent lift in half-year net profit $462.03m as revenue across its company owned and franchises stores rocketed 25.8 per cent to $5.12bn.
“No, no, nothing has changed. The government wanted companies to come out in good health and they put JobKeeper in and it worked well for the economy, so in terms of what we received it was a tiny amount of money so we have got no reason to (pay it back),’’ Mr Harvey told The Weekend Australian.
Other companies have subsequently paid back JobKeeper funds in the wake of super profits, including Domino’s Pizza, Cochlear, Adairs and Super Retail Group. Furniture chain Nick Scali originally said it wouldn‘t pay back JobKeeper but a few days after its profit result was released succumbed to pressure and backflipped, to send the funds back to the government.
On Friday Shadow Assistant Minister Treasury Andrew Leigh poured that pressure on Mr Harvey.
“Australian taxpayers gave Harvey Norman and franchisees $22m in JobKeeper. They don't need a cent of it. Firms with far smaller profits have already paid back their JobKeeper funds. At a time in which one million Aussies are out of work, taxpayers shouldn’t be supporting a billionaire. Time to pay it back, Gerry.”
Meanwhile, Mr Harvey denied JobKeeper was helping the retail sector to experience its boomtime conditions, rather pointing to shutdown international borders and the end of overseas travel for now for the flood of demand hitting his stores.
“I’ve been in retail for 60 years and nothing has ever been as good as this,” Mr Harvey told The Weekend Australian.
“I have been doing this since the late 1950s and I have never seen anything like this, and I have seen quite a few recessions and boom times and nothing has ever been as good for retail.
“And it is not just Australia, it is the rest of the world. So whatever has happened here, it is happening in every country that we are in, New Zealand is no different to here.”
In Australia Harvey Norman’s first-half sales rose 27.3 per cent, while New Zealand sales were up 17.9 per cent, Slovenia and Croatia sales were lifted 13.7 per cent. Ireland was up 54.5 per cent, Northern Ireland surged 20.7 per cent, Singapore rose 1.9 per cent and Malaysia grew 7.3 per cent.
Same store sales growth in Australia was up 27.5 per cent.
And Mr Harvey isn’t greatly concerned about a pullback in spending in 2021, as JobKeeper is ended and other stimulus measures come to an end, with the retail billionaire not convinced the JobKeeper program was a key driver of retail spending.
“I don’t think JobKeeper has been that big a deal for retail, the bigger deal has been people not spending money on overseas holidays and restaurants and that sort of thing.”
The momentum has pushed into the new year, Harvey Norman said, with double-digit sales growth through January and February.
Harvey Norman declared a bumper interim dividend on back of the record sales and profitability, announcing a December half dividend of 20c per share, payable on May 3. That is up from 12c declared last year but later cancelled due to the emerging COVID-19 health crisis (later a special dividend of 6c per share was paid).
For the December half the value of net assets increased 13.9 per cent to $3.74bn, from $3.28bn. Harvey Norman was in a net cash position of $21.75m after paying down more than $500m in debt to zero.
Shares in Harvey Norman ended down 6c, or 1.1 per cent on Friday at $5.24.
Businesses’ late bill payments at their worst since Covid
Late payments by businesses are at their highest level since the depths of Covid-19, and it’s the hospitality and construction sectors faring worst.
Coles rings changes to improve stock availability
A restructure at Coles pushed through by CEO Leah Weckert aims to address one of the biggest grievances among shoppers and improve stock levels and availability in the store.