COMMENT: Missing Numbers Flaky Results, Why Gerry Harvey Should Quit
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COMMENT: What’s the difference between Woolworths, Coles and Harvey Norman? A lot when it comes to responsible financial reporting and the way in which their operations are run.

A trip through the annual financial reports of all three companies reveals that a lot is lacking when it comes to trying to glean information from the Harvey Norman annual report.

There are no breakdowns of how his consumer electronics or IT divisions is performing because Gerry Harvey and his management team don’t want the market to know how each individual division is performing.
Are appliances doing better than IT or are furniture sales propping up the company?

The fact is we will never know because the inclusion of performance breakdowns would expose some of the weaknesses in the Harvey Norman operation. Talks to analysts will tell you that Harvey Norman is more a retail property company than smart discount retailer.
Unlike Coles, who publish their Officeworks store’s department performance or Woolworths who does the same with its Dick Smith stores, Harvey Norman chooses to hide their numbers and one has to question why?

Is it because their consumer electronics and IT operations are struggling up against JB Hi Fi, Officeworks, Dick Smith and the likes of The Good Guys?

Analysts and Investors are now calling for more transparency and better reporting by the retail giant who is suffering on several fronts. It was only 12 months ago that Gerry Harvey was telling the world that Clive Peeters was a “great buy” at $35M, now after losing a million dollars a month from a business that was breaking even when he acquired it, which he intends to shut down at an additional cost of 10 million.

 It was only a few years ago that Harvey Norman had 60% of the Australian IT market, which is the era when brands like Logitech made serious money partnering with the retailers.

Recently they walked away from Harvey Norman due in part to what is called the “Gerry Tax” which is the 20% that Harvey Norman demands above normal profit margins. There is also the issue of falling sales with Logitech executives claiming that as Harvey Norman demand more from the Swiss Company that sales from his stores were actually falling while climbing with other retailers.

Once a great discount retailer, Gerry Harvey and his wife Kate Paige, who plays a key role in the Harvey Norman business appear to be on a slippery slope, as Gerry makes ill-timed and  ill-informed comments about online retailing and the lack of a GST Tax.

Last week he was blabbering Australians should be “as happy as pigs in shit” with low unemployment and the resources boom, but he reckons they’re too frightened to spend – in his stores presumably – and has predicted this Christmas will be a shocker.


 Or is it more a case of products being expensive in Harvey Norman stores and when consumers do walk into his stores they get a poor retail experience?

Melbourne based writer Leon Gettler said that Gerry Harvey is kidding himself if he blames his problems on nervous consumers. The idea of the so-called cautious consumer is not what it’s cracked up to be.

He says that despite the signs emblazoned all over the front of shops advertising 30 per cent, 50 per cent and 70 per cent discounts, no one is buying. But that’s not about consumers being too scared to spend: it’s a failure of his retail management strategy.

Blaming his poor performance on frightened consumers is a cop-out,  as yesterday’s ABS numbers reveal household spending is not weak at all.

The hard reality is that Harvey Norman appears to be more a property company than a smart retailer. His recent 9% climb in profits was more attributable to a revaluation of his property portfolio than it was selling more products.

Gettler claims that a closer analysis of GDP figures shows that household spending is doing well. Retail spending accounts for only 32 per cent of total household spending – in other words, more than two thirds of household spending is done outside the retail sector. 

Closer analysis of the data suggests that while retail sectors are experiencing serious deflation and weak spending volumes, households are spending more on non-retail goods and services.

Gerry Harvey is today being hurt by people and organisations that are smarter than he and his management team.

Well known for their bullying of vendors and distributors the Harvey Norman team is constantly being outperformed by the likes of JB Hi Fi who started out in 1974 selling audio equipment and records.

They are now a major seller of mobile phones, home theatres, computers anything with an Apple brand on it and above all content such as music, video and games products that are hard to find in a Harvey Norman store.

JB Hi Fi recognised that goods under $99 are often the bait that draws consumers into their stores.


Consumers who walk in to a JB Hi Fi store to buy an iPad, Phone or the latest Samsung offering are tempted by racks of cheap CDs and DVDs. In an age when retailers are worried about the Internet, JB Hi Fi is launching a digital music streaming service followed by a video streaming service.

Last week when I walked into a large Harvey Norman store in Sydney and asked for assistance the retail assistant told me that did not work in the IT department and that she would find someone who did, 10 minutes later I was still waiting.
What Gerry Harvey needs is a new younger management team, a team that have the passion and the nose to turn his business around. Most Harvey Norman executives today are clones of Gerry Harvey and he is a force who back in 1997 said the Internet was a “fad.” Since then he has fought the Internet day in day out as he has tried to hold onto consumers.

What he needs to do is retire and the sooner the better the business will be.