Retail king Gerry Harvey has poured more than $1 million of his own cash into 550,000 more Harvey Norman shares, showing the veteran still has confidence is his company’s ability to ride out the current retail storm.
Analysts believe the move is an opportune one, given the company’s shares are so low and it remains profitable.
Harvey Norman shares have fallen below $1.90 since Billabong and JB Hi-Fi announced profit downgrades and in trade this morning were down 1.5% to $1.85.
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City Index chief strategist Peter Esho told SmartCompany this morning he believes the move was a good investment.
“If you look at Harvey Norman as a business, right now it’s still very profitable, and it’s back by a large real estate portfolio.”
“There is no doubt that franchisees will be feeling the pressure, but in terms of the group as a whole, it’s performing very well.”
Esho also says there will be more benefits for franchisees, especially as the company continues with its online expansion.
“If you look at the online store model, franchisees are still getting money if you order online because items will be dispatched from the closest store to the customer. The most important thing is that they just continue to work with franchisees.”
Harvey also made comments yesterday suggesting the business couldn’t rule out setting up an offshore website to escape paying GST, as the industry continues to lobby the Government to raise the tax-free threshold for imports.
“There is a huge incentive to do that…you cannot have somebody selling something from a site outside Australia that evades all the costs of doing business here.”
“Here, you’ve got every government agency you can think about on your back all day. If I’ve got an overseas website, they can all go and get nicked. They can’t sue me, they can’t threaten me, they can’t do anything.
Myer chief Bernie Brookes has threatened expanding his company’s own offshore operations as well.
The complaints come despite the Productivity Commission noting in its recent report into the retail sector that lowering the GST threshold wouldn’t raise any more revenue, and that the issue is actually one of the least of retailers’ problems.