Australian retail heavyweights Harvey Norman and David Jones have announced record revenue figures of $5.34 billion and $36.5 million respectively to 30 June and 28 July 2007.Sales of flat screen televisions and notebook computers have been a major contributor this year, with research firm GFK reporting notebook sales now account for 40 per cent of all PC sales.
It also said that in the first six months of 2007, flat screen TV sales grew 58 per cent and expect this to top 100 per cent by Christmas.
Directors of Harvey Norman Holdings announced sales from its franchised stores, commercial divisions and other outlets in Australia, New Zealand, Slovenia and Ireland were up 16.5 per cent on the corresponding period last year, with like-for-like sales also up 8.6 per cent.
Over the quarter April to June 2007, profits increased 15.4 per cent on the corresponding period last year, with like-for-like sales up 9.5 per cent compared with the same time last year.
David Jones increased its profit after tax (PAT) guidance for the second half of the year (ending 28 July) to $36.5 million, up between 37 per cent and 42 per cent on the same time last year.
Over the last quarter, its like-for-like sales increased 10 per cent on the previous quarter, and it anticipated sales for the fourth quarter (ending 28 July) would climb 8 per cent on a like-for-like basis and 11 per cent on a total sales basis.
Harvey Norman, controlled by billionaire Gerry Harvey, is adding outlets to its 238-store network to tap rising demand for electronics equipment and computers, while also taking advantage of last year’s collapse of rival NSW-based electronics retailer Retravision.
Sales rose to A$1.36 billion in the three months ended June 30 from A$1.17 billion a year earlier, the retailer said in a statement today. Sales from stores open at least a year rose 9.5 percent.
“We believe Harvey Norman has continued to increase its market share over the period, particularly from smaller and independent operators,” said James Casey, an analyst at ABN Amro Holdings.
“If we are to have a shortage in flat panel displays we could see a slight slow down. Having said this, we are very bullish on retail at the moment and believe that the growth will last until Xmas.”
Harvey Norman opened 23 new Australian stores during the year and closed four. It also added four more outlets to its New Zealand operations, two in Ireland and one in Slovenia.
David Jones, Australia’s second-largest department store chain, today said in a statement that net income at the Sydney-based retailer may rise 42 percent in the six months ending July 28, up as much as 13.5 per cent on a previous forecast.
Unemployment levels close to 33-year lows and strong consumer confidence is fuelling demand for David Jones’ designer fashion brands and Harvey Norman’s flat-panel televisions, while the rising domestic currency boosts profit margins.
The Australian dollar has gained 17 percent the last 12 months to reach an 18- year high, lowering prices paid for imported goods.
“Trading conditions have been buoyant,” said Grant Saligari, an analyst at Commonwealth Securities Ltd. in Sydney. “The currency is moving in the right direction, costs are pretty well under control, inflation is moderating and with no wage pressures it really is a good time for them.”
David Jones’ share price rose 11 cents to A$5.63 at 1:19 p.m. in Sydney, extending this year’s gain to 35 percent. Harvey Norman shares fell 8 cents to A$5.41, paring this year’s advance to 42 percent.
It expects its second-half profit would be between A$36.5 million ($32 million) and A$37.8 million. Annual earnings will rise as much as 34 percent to A$108.9 million.
Designer Brands
Chief executive officer Mark McInnes is luring affluent customers to his 35-store chain with more designer brands as larger rival Myer Pty increases its range of cheaper labels.
David Jones, which opened its first new store in six years in May, said fourth-quarter sales rose 11 percent with revenue from outlets open at least a year gaining 8 percent.
“We have a strong management team and a proven business model,” McInnes said in the statement. “As such, we are well positioned to continue to deliver profit after tax and dividend growth for shareholders throughout the economic cycle.”
He said it is focusing on the most profitable stores, adding the former Myer site at Burwood in Sydney’s western suburbs and quitting two locations elsewhere in the city after failing to agree with landlords on new leases.
Myer, which was bought by TPG Inc. from Coles Group Ltd. last year for A$1.4 billion, is stocking cheaper clothing brands exclusive to its 62 outlets to boost earnings.
David Jones is the best performing retailer in the benchmark S&P/ASX 200 index since McInnes took the job in February 2003 with a three-fold gain.