Be happy and spend, Gerry Harvey urges
August 30, 2011 - 5:17PM
Comments 167 Vote

Too many things affecting consumers, Gerry Harvey says. Photo: Louie Douvis
Australians should be "as happy as pigs in poo" with low unemployment and a resources boom, but instead they're scared to spend money, retail king Gerry Harvey says.

The chief executive of retailer Harvey Norman says he can't find a path through the fog of bad news as it continues to weigh on consumers.

"I don't see a way at the moment. I don't see how anything's going to change," Mr Harvey said. "You've got too many things out there affecting the minds of humans and it's just an avalanche of media activity and government activity that's making people unhappy and not wanting to spend their money."

Advertisement: Story continues below
Despite the grim general outlook, Harvey Norman reported its net profit after tax increased 9 per cent to $252.26 million in the year to June 30, up from $231.41 million in the previous year.

The company's outlook for 2011/12 remains "cautious" due to global volatility, increased utility costs, a possible increase in unemployment numbers, dampened housing markets and weak equity markets.

Mr Harvey says his business will go along "OK" over the next 12 months, but he remains confused by the lack of confidence among consumers in the Australian market.

"With unemployment at 5 per cent and a resources boom we should all be happy as pigs in poo," Mr Harvey said.

He said the current economic mix was terrible, with retail, manufacturing and tourism all in trouble. But he says something's wrong when New Zealand, which isn't benefiting from a mining boom, is forecasting stronger growth than Australia.

Harvey Norman reported its full year revenue was $2.7 billion, compared with $2.45 billion the year before.

Shares in the retailer were 3 cents lower, or 1.5 per cent, at $2.00, while the broader market ended the trading day up about 0.1 per cent.

RBS analyst Daniel Bruen said Harvey Norman's result was in line with expectations, but trading conditions would be "a bit soft" in fiscal 2012, consistent with JB Hi-Fi's outlook.

"That's something that's a bit of a concern," he said. "Judging by the guidance on revenue and the trading update, it's going to be pretty tough period over the next 12 months."

Mr Bruen said the company's online strategy was still in its formative stages and expansion plans remained on hold in Europe.

Harvey Norman's sales from its franchised Harvey Norman complexes, commercial divisions and other sales outlets in Australia fell 5.3 per cent for the period July 1 to August 29 compared to the corresponding prior year period.

The company also anticipates increased sales in the lead-up to the Rugby World Cup in New Zealand and the London Olympics as it ramps up its online strategy.

While there had been much commentary about the cautious consumer, Harvey Norman franchisees had "never experienced so much customer traffic and transactions".

The company offered a final fully franked dividend of 6 cents per share.