2 weeks Ago By David Richards
Harvey Norman could delist from the ASX in coming decades but some claim that management he is already talking to private equity firms about a potential sale. Executive chairman Gerry Harvey hates accountability and questions about his business by the likes of the Australian Shareholders Association who have questioned him several times at his AGM’s. Earlier today he bemoaned the climbing costs associated with continuous disclosure obligations required of an ASX-listed company and said the retail giant he co-founded would most likely not exist in its current form in the next two decades.
His comments came after Harvey Norman recorded a 4 per cent slide in revenue to $4.1 billion and a 35 per cent drop in net profit to $352.5 million.
“I don’t think we’ll be a public company 10 or 20 years from now. I think that we’ll be owned by private equity or privatisation,” Harvey said. “Exactly what, I don’t know .
.. It’s a case of, you’ve got to move with the times.
” He said the company had always had conversations with private equity in the past 50 years and he said he was “sure” a takeover would happen. “I’ve got no doubt it’ll eventuate.” ChannelNews understands that the latest talks took place this year with the 84 year old Chairman appearing to be getting ready to move on from a business that that has dominated the appliance furniture and consumer electronics landscape for several decades.
Harvey said it had sold less product but that its market share had increased in the higher end of the market where JB Hi Fi is also witnessing sales increases. One noticeable problem was the 1.5% year on year increase in operating expenses, which came in at $1.
65 billion. This was countered by operating cash flows edging up $6.3 million from FY 2023 to $686.
5 million, with a cash conversion of 100.4%. Management also noted a big turnaround in profits for the second half of the year.
While profit before tax in H1 FY 2024 was down a precipitous 45.7% from H1 FY 2023, second half profit was up 1.9% from the prior corresponding half year.
On the balance sheet, Harvey Norman reported a net debt to equity ratio of 14.49%. The big question now is who would want to but a retail operation in a market that is facing problems.
In the USA big retail groups are struggling, with many closing down stores, Target closed several recently because of high theft rates. Analysts believe that it will be hard to sell as a going concern and that the most likely scenario is to dell off the likes of Harvey Norman Commercial, Domayne or Joyce Mayne. Harvey Norman’s business strategy revolves around providing a wide range of products, integrating online and offline operations, competitive pricing, excellent customer service, strategic store locations, private label offerings, and international expansion.
Recently the Company made a “string of investments” across the West Midlands in the UK in an effort expand its global footprint and add to its UK portfolio of two stores in Northern Ireland. The Merry Hill retail complex is part of a large shopping complex in Brierley Hill near Dudley, England. The store will open in autumn 2024, with the retailer acquiring the 57,000 sq ft site of a former Debenhams location.
It will offer a selection of luxury furniture, homeware products and home appliances, audiovisual and technology products. The investment at the store will create 100 new jobs across sales, administration, marketing, operations, warehousing and management claims Harvey Norman management..
