Gerry Harvey on why Harvey Norman was retail winner of the pandemic | Alds

“I’ve been doing retail since the late 1950s and I’ve never seen anything like this,” the retailer’s chairman and co-founder Gerry Harvey told news.com.au

Harvey Norman’s first-half profits have more than doubled, with huge spikes in sales continuing through January and February.

Total sales for the global retailer increased more than 20 per cent for the start of 2021. In Australia alone, total sales rose more than 22 per cent in the first two months of the year.

“We’ve seen ups and downs and recessions but retail in Australia has never seen this,” he said.

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Harvey Norman recorded a 116 per cent lift in half-year net profit to $462 million as revenue across its stores jumped more than 25 per cent to $5.12 billion. The retailer recorded profit before tax at $644 million, a 114 per cent increase from $301 million in the previous half year.

“The big rise is because people have been spending on their homes and not going out. That’s happening right across the world,” he said.

”It hasn’t stopped. In April, May and June, sales went through the roof and it hasn’t stopped in January and February.”

The retailer has been one of the big winners to thrive through the pandemic as customers moved to sprucing up their homes and at-home offices while being homebound.

“People now are spending a lot more time in their home they’re looking at their house and garden rather than going to the restaurant or booking the next holiday so they’re being assigned to their home,” Mr Harvey said.

Mr Harvey told news.com.au the “huge increase in profit” was simply “good luck”.

He added it’s not just Harvey Norman recording these profits as other furniture and electrical retailers – “everyone who is selling our sort of product across the world” – are also profiting.

“This has been an extraordinary time for the sort of retail we’re in,” Mr Harvey said.

However, he pointed out that it’s been a very difficult time for other industries, including hospitality and travel.

He added that Harvey Norman took the opportunity to gain marketshare when it saw the opportunity and opened a number of stores to meet the surge in demand.

The retailer opened up a number of new warehouses to store all the stock customers were buying. “We’ve opened up another 60 warehouses across Australia,” he disclosed.

“There’s been a lot of stock shortages over last six to eight months so we are buying everything we can get our hands on so we’ve got the stock,” he said.

In Australia, Harvey Norman’s first half sales rose 27 per cent and in New Zealand sales were up 18 per cent.

Sales in Slovenia and Croatia also increased, up almost 14 per cent, while Ireland was up a massive 54.5 per cent and Northern Ireland sales rose 21 per cent. Singapore was up almost 2 per cent and Malaysia increased by 7 per cent.

“It’s been like this in every country not just Australia,” he added. “Sales have gone through the roof.”

Mr Harvey added that while the retailer’s online sales increased during the pandemic, foot traffic in the showrooms increased when people were allowed to venture out again.

“The minute we opened the showrooms, online sales dropped dramatically and sales went through the roof,” he said.

“I’m not convinced by a long shot it [online] will be anything people are convinced it will be,” he added.

“With furniture, bedding and electrical, the greater percentage of people want to come into the store, not buy online,” he said.

Shareholders ar also getting a big payout on the back of Harvey Norman’s success, with dividends doubling on the back of the profit surge.

The half-year dividend will give shareholders 20 cents per share, up from 12 cents declared last year but later cancelled due to the emerging COVID-19 health crisis.

Harvey Norman was in a net cash position of $21.75 million at the end of December 2020 compared to a net debt position of $553.23 million at the end of 2019.