Gerry Harvey ‘realistically’ happy

HarveyNorman-exteriorHarvey Norman chairman Gerry Harvey is ‘realistically’ happy with the company’s Boxing Day sales, but has admitted that competition was more intense this year amid the hype surrounding Amazon and aggressive discounting by rival JB Hi-Fi Group over the last week.

Speaking to Inside Retail, Harvey said that while sales across the network as a whole were up on last year’s Christmas and Boxing Day, the typically competitive period was a step-up on previous years.

“I always hope I’m going to do a bit better, but realistically I should be happy with what we’ve got, because there was all that talk about Amazon,” Harvey said.

“There’s no doubt that it was a bit more competitive this year because of all that.”

Amazon offered a range of deals over Boxing Day, swiping 40 per cent off a range of products and running two-for-one deals on select CDs, DVDs, Books and movies.

Other online players such as Catch Group wiped up to 80 per cent off TVs and appliances, while Kogan.com discounted over 1700 products.

The tactics have led industry watchers to predict that online players will grab a larger slice of the expected $2.38 billion Boxing Day pie this year.

Meanwhile, Harvey Norman’s biggest physical competitor JB Hi-Fi has just concluded a week-long post-Christmas sale that wiped between $300 and $1200 off a wide range of TVs in its catalogue, as well as steep discounts on a variety of small appliances and accessories.

But despite stiffer competition, the retail veteran was nevertheless optimistic about the year ahead, saying that Amazon has ultimately become a victim of its own media hype and was beginning to pay the price for not meeting steep expectations.

“With all the media attention Amazon had, there’s only one way that can go and that’s backwards,” he said.

“If I hype something up, it doesn’t matter what it is, if it gets to that level it never works.”

Harvey added that he had yet to see a reason why the retailer won’t have another positive year, following a 29 per cent increase in net profit to $448.9 million in FY17.

“The sales at the moment are okay, so for it to be different to that, something has to change … a meteorite might hit the earth, but you can only go on the known knowns, and on that basis everything looks okay,” he said.

International trade finds its stride

Harvey Norman’s emerging presence in Europe and Southeast Asia could potentially bring home the bacon for the homewares and appliances giant, as competitive pressures mount at home.

Harvey has long held an ambition to make the company’s growing presence in Ireland, Croatia, Slovenia, Singapore, Malaysia and New Zealand the lion’s share of revenue, but now believes international sales could match Australia within 10 years after a bumper start to FY18.

“We’ve just had to best six months we’ve ever had overseas,” Harvey said.

Operations in Ireland, which booked a $4.14 million loss in FY17, are now in the black according to Harvey, with a new flagship set to open in Dublin in the coming months.

Stores in Slovenia and Croatia have also apparently picked up following several years of subdued growth, coming to $110.45 million in revenues during FY17.

In Southeast Asia, where sales increased by 69.9 per cent to $7.9 million in FY17, Harvey said a 9,200sqm flagship in Singapore’s popular Millenia Walk centre is now the best performing Harvey Norman store in the world.

“Because of [Millenia Walk] every major shopping centre in Malay and Singapore wants Harvey Norman as an anchor tenant, the landlords are knocking on our door,” Harvey said.

“In five years from now international could be a quarter or even a third of our profit – that would be a pretty good result.”

Harvey has been buoyed by performance in Southeast Asia, particularly because players like Amazon and Chinese giants JD.com and Alibaba already operate successfully in those markets.

He’s of the view that many Southeast Asian consumers are browsing online stores for larger appliances and white goods, but are ultimately going into stores to make purchases.

A resurgence overseas could drive investor confidence around the company when Harvey Norman reports its interim result in the coming months, after it shed just over 19 per cent of its market value in calendar 17 in the lead up to Amazon’s launch and amid disagreement over its accounting practices.

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