Retailer Harvey Norman repeated its now familiar warning that its retail margins continue to be under pressure after sales for the financial year ended topped the $6 billion mark for the first time ever.
The retailer, however, revealed that while the final figure of $6.03 billion was up 3.8% from 2008’s $5.81 billion, the increase disguised some vastly different results over the year.
The year rise was slightly better than the 3.5% rise in topline sales in the six months to December 2008.
In fact the company had a solid start to the financial year in the September 2008 quarter, sales then collapsed in the December quarter, especially in Ireland and New Zealand, with Australia also weak.
A slow improvement continued into this year in Australia after an improvement in December from the first stimulus package from Canberra, but the retailer’s offshore markets were still below par.
Then the federal government’s cash splash hit from April onwards and same store sales, the best measure, jumped 4.5% in the quarter and helped boost overall sales growth.
Despite this pick up in the June quarter, investors didn’t like the warning on retail margins (which it has issued with each sales report in the past nine months) and the shares fell nearly 7% at one stage. The ended off 21 cents, or 6.%, at $3.26.
Like for like (same store) sales for the year increased 1.4% from 2007-08, down on the 8.7% growth in 2008 (which did slow in the last months of the year).
Like for like sales rose 1.4% in the first half of the year, so unlike David Jones, Myer and JB Hi Fi, there was no real second half improvement for Harvey Norman.
The company said that on a quarterly basis, sales from the franchised "Harvey Norman" stores, commercial divisions and other sales outlets in Australia, New Zealand, Slovenia and Ireland (excluding Singapore) totalled $1.49 billion for the fourth quarter ended 30 June 2009.
"When compared to sales for the period 1 April 2008 to 30 June 2008, the increase was 4.5%.
"Like for like sales for the fourth quarter ended 30 June 2009, when compared to the same corresponding quarter ended 30 June 2008, increased by 2.0%.
"In Australia, for the fourth quarter ended 30 June 2009, sales from the franchised "Harvey Norman" complexes, commercial divisions and other sales outlets increased by 6.7% when compared to the same corresponding quarter ended 30 June 2008.
"Like for like sales for the fourth quarter ended 30 June 2009 when compared to the same corresponding quarter ended 30 June 2008, increased by 5.0%," it said.
That’s the stimulus at work. In fact top line sales rose 4.9% in the third quarter and 3.2% on a like for like basis, meaning there was a significant lift in sales growth in the final quarter.
But the question for analysts and investors is whether these new sales are as profitable as in previous years, or being made with finer margins and bigger discounts to shift stock.
The retailer broke out sales figures for Australia for the 4th quarter, unlike at the half way mark in the sales report for the first six months of 2008-09.
The industry giant, Woolworths releases its 4th quarter and full year sales figures today.
Of interest will be how sales growth has gone in Big W and in the Dick Smith and Tandy chains, with analysts looking for signs of a sales boost from the stimulus spending in these businesses, rather than in the usually strong Australian supermarkets and liquor business.
And a big upgrade from Super Cheap Auto, which saw the company’s shares jump 27 cents to $3.96, within sight of the year’s high of $4 (and not too many companies can claim to be trading around their 52 week highs at the moment).
In a statement to the ASX the company said it expected a rise of 24% in earnings, or more than $6 million for the year to June 30.
"Like for like sales growth in the Group’s three businesses, for the 52 weeks to 27 June 2009, was as follows: Supercheap Auto 7.3%; BCF 12.5%; Goldcross Cycles (3.1%)
"Subject to the finalisation of end of year accounting entries, the Group is forecasting that Group Net Profit After Tax for the 52 weeks to 27 June 2009 will be in the vicinity of $32m. (Prior comparative period – $25.8m.)"
Super Cheap Auto Group Managing Director, Mr Peter Birtles, said the results demonstrated the resilience of the Group’s businesses.
“Supercheap Auto and BCF performed well in both halves of the year, with particularly strong results achieved in the second half,” Mr Birtles said.
“The Group’s performance highlights the benefit of our continued investment in growing our businesses.
“During the year, we have opened 23 new stores, refurbished a further 31 Supercheap Auto stores, merchandised a high number of new products, improved our supply chain operations and continued to invest in our team members.”
The Group will announce its 2009 full year trading results on 27 August 2009.
