Harvey Norman is said to be in negotiations to buy Retravision stores in a bid for survival.
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|Could stores like these soon be Harvey Norman outlets?|
The retail giant is said to have already come to an agreement on of a Retravision and Betta store in Gunnedah, NSW, and is said to be in negotiations with “half a dozen” other store owners to convert to Harvey Norman branded operations, reports AFR.
Both stores at Gunnedah are to be run by the owner of the Retravision outlet.
This is as part of a ‘survival of the fittest’ strategy by Harvey Norman, who are looking to close in on smaller operators that failed to survive in the post-GFC cautious consumer environment.
Harvey’s plan appears to be the replacement of the struggling Retravision store with the Harvey Norman brand selling TV and AV goods, while the Betta store will sell white goods and appliances.
The company’s Chairman Gerry Harvey also hinted this formula may be used for other Retravision takeovers and believes better management along with the well known Harvey brand will save the troubled outlets.
And it seems the retailer is undeterred by its past experience when it bought out the Clive Peeters store network for $55m in 2010, which placed a continued drag on Harvey profits, forcing the closure of several outlets.
Retravision Southern which accounts for 104 independently-owned franchise stores in Vic, NSW and Tas was placed into administration in May. The Retravision group is believed to have debts to the tune of tens of millions.
But Harvey too is struggling with Citigroup analyst Craig Woolford yesterday tipping 26 stores will close in the next 3-5 years.
In May the troubled retailer posted an 8.1% downturn in sales and growth of 7.3%, which fell to 6% when including Clive Anthonys stores.
However, Gerry Harvey believes the dire straits retailers have found themselves in of late may be coming to an end and there may be green shoots ahead.
“We are going into July-December period and we have a belief we will not drop in sales in the six month” he said.
Harvey’s reported pre-tax profit plunged 43.9% in the third quarter of the financial year in March.
Read: Harvey Norman Profits Plunge Sales Take An 8.1% Dive