Harvey Norman shares jump to record high of $7.69 as Gerry Harvey predicts biggest Christmas sales yet

Harvey Norman boss Gerry Harvey has predicted record sales across the retailer’s Australian stores over Christmas as the group’s shares surged to a record-high on Wednesday.

At its annual shareholding meeting in Sydney on Wednesday, the iconic retailer revealed same-store sales in Australia grew 6.4 per cent over the period between July 1 and November 20.

Total sales for the entire group, which has 316 franchised and company-operated stores across Australia, New Zealand, Asia and Europe, rose 9.1 per cent with same-store sales growth of 8.1 per cent over the period.

“This will be a record Christmas for retail sales, but that happens every Christmas now,” said Mr Norman. “We’ve got a bigger population, more money in the community, so it has to be better.”

The prediction came as the 86-year-old retail veteran lamented ongoing inflation pressures across the economy as data showed core inflation rose to 3.8 per cent over the 12 months to October.

“A figure like that today, I don’t think it’s surprising to people in business like us. As we’re seeing the cost of living for people and of running a business (climb). We’ve got so many rules and regulations now, a wage system that is so complicated and compliance issues that are so complicated.”

Mr Norman added that for the retailer to develop a new store now costs 50 per cent more than it did five years ago. “It takes so long to get approvals, there’s too many regulations. As far as productivity is concerned we’re going backwards at a rate of knots,” he said. “And we have some of the most expensive energy in the world as well.”

However, the retailer’s shares jumped 4.1 per cent on Wednesday morning to $7.69 as investors cheered its overseas expansion and strong sales growth in Australia.

Same-store sales removes the effect of new stores, allowing investors to compare the growth of existing outlets.

Broker Citi described the trading update as “strong” and said the Australian like-for-like sales were a little ahead of forecasts.

“The benefits of lower interest rates and household income growth could boost Harvey Norman’s sales,” Citi said as it stuck to a $7.70-a-share valuation on the business.

AI boosts sales

Chief executive Katie Page said artificial intelligence had been used to improve sales.

“Our 10-year flagship retail expansion has positioned Harvey Norman as Australia’s most successful omni-channel retailing export in home, lifestyle and tech - success that is measured in duration, sustained growth and total physical, international footprint,” she told shareholders at the meeting in Western Sydney.

Overseas sales benefited from a weaker dollar. The company is opening more stores in Britain and Malaysia.

The stock has surged 63 per cent this year, giving the company a valuation of $9.5 billion and adding to the wealth of billionaire co-founder Gerry Harvey. “It’s pretty hard not to be happy because the share price has doubled in the last three or four years,” Mr Norman said.

Dealing with crime

Mr Norman also joked that retail giants Woolworths, Bunnings and Coles should just let floor staff punch shoplifters to help end the problem of store theft in Victoria.

Mr Norman made the tongue-in-cheek comments at the company’s annual shareholding meeting in Sydney on Wednesday morning.

“It’s a bit strange that you can go into Bunnings and all the staff hide and you can take whatever you like,” he said.

“My best advice (to retail staff) is when they come in hit them (a shoplifter) as hard as you can, to give them a message, so they don’t come back... So I would be very sympathetic to someone punching someone.”

He later clarified the remarks were not intended to be taken literally, and were made to highlight the need for society to get tougher on crime.

Mr Norman also said he thought house prices are too high in Australia and that is partly to do with too many rules. “If you want to build a house it’s not that easy,” he said. “The tradesman are making a fortune compared to what they used to make.”

Elsewhere on the share market on Wednesday, shares in online-only retailer Temple & Webster crashed more than 30 per cent as its trading updated missed the market’s expectations.