Sales through Harvey Norman’s stores in Australia, New Zealand, Ireland and Slovenia performed well in the first half but there was a late weakening in the growth rate.
The company said yesterday in a statement to the ASX that first half sales grew at 16.7 per cent on a gross basis and 7.1 per cent on a like for like (same store) basis.
But that represented a noticeable slowing from the hectic rate in the first three months to September of a top line figure of 18.1 per cent and like for like growth of 8.2 per cent.
Sales in financial year 2006 grew at a top line rate of 12.7 per cent and on a like for like basis 7.0 per cent, while in the corresponding period of 2005 (the six months to December 2005) are at a top line rate of 10.2 per cent and by 6.5 per cent on a like for like basis.
Here’s yesterday’s statement:
“The Directors of Harvey Norman Holdings Limited are pleased to announce that sales from the franchised “Harvey Norman” stores, commercial divisions and other sales outlets in Australia, New Zealand, Slovenia and Ireland (excluding Singapore and Rebel Sport Ltd) totalled $2.71 billion for the six (6) months ended 31 December 2006.
“When compared to sales for the period 1 July 2005 to 31 December 2005, the increase was 16.7%.
“Like for like sales for the six (6) months ended 31 December 2006, when compared to the same period ending 31 December 2005, increased by 7.1%.
“During the months of November and December 2006, fourteen small format stores were acquired from Retravision (NSW) Ltd. Six (6) stores were re-branded “Harvey Norman” and eight (8) stores were re-branded “Joyce Mayne”.”
No other commentary, but the 2006 financial year figures and those in the first quarter of fiscal 2007 were given a kick along by the World Cup Soccer hype surrounding Australia’s appearance.
Harvey Norman shares have risen by around 10 per cent over the past three months to trade above $4 a share. The shares rose five cents yesterday in an initial reaction to the sales figures but then fell around 10c to $3.95 as investors looked again and saw the slowing pace of growth in sales.
The fact that the shares fell in yesterday’s record market tells you that investors were a little disappointed with the figures.
The stronger demand for HVN shares over the past quarter came from the private equity bid for HVN’s 53 per cent owned subsidiary, Rebel Sport and market hopes that Harvey Norman co-founder, Gerry Harvey might succumb to a similar offer and put the company up for sale.
So far that’s just a pipe dream and Mr Harvey looked spry and on top of the world at the Magic Millions horse sales and racing carnival on the Gold Coast on the weekend.
Harvey Norman did say that the first four months to the end of October saw sales up 18 per cent and up 7.9 per cent on a same store basis. They hinted at a slowing, though still robust, growth rate.
It would seem that sales in the vital last quarter, the lucrative Christmas period, slowed even further. Same store or like for like sales are now growing not much faster than they did in financial 2006.
That probably had as much to do with the rate rise in November as anything else.
Shareholders in Rebel Sport are still waiting for the private equity offer to emerge in concrete form.
Rebel last week reported sales of $210.5 million for the first six months of this financial year, up 14.5 per cent on the same period a year ago and up 11 per cent on a like for like basis.
Private equity fund Archer Capital has said it will offer $4.60 a share for Rebel.
Shareholders meet to vote on the proposal in March.
Another thing is that while HVN is quick to release its sales figures, it is very slow to release earnings which won’t come until the end of the reporting season in either late February or early March.
Another interest rate rise will make life tougher for HVN but it has weathered the three rises in 2006 very successfully.
