Harvey Norman’s genius COVID move
Retail veteran Gerry Harvey says he took a massive gamble as the coronavirus pandemic ravaged the sector, but it paid off big time, with his company seemingly set for a record first half result.
Harvey Norman took the unusual step on Monday of releasing unaudited figures for the period from July 1 to September 17 - not even a full quarter's result - when it became apparent something massive was happening and had to be disclosed to the Australian Securities Exchange.
Sales revenue had jumped more than 30 per cent, while profit before tax, excluding the impact of net property revaluation adjustments, had skyrocketed in the order of 185 per cent.
"That's way beyond anything that you could imagine," Mr Harvey told NCA NewsWire.
"I started in retail in 1959, and I've never seen anything like this."
And with the December quarter traditionally being the best for the retail sector, all signs are pointing to an epic result for Harvey Norman for the first half of 2020-21.
But the billionaire and racehorse breeder was just as worried as everyone when the first wave of the COVID-19 pandemic stuck.
"In March, I thought 'we've got to batten down'," Mr Harvey said.
The company increased its debt facility to $1 billion "but then sales started to go through the roof", he said.
"People were staying at home, looking after their garden and house, not spending money on restaurants or going out," Mr Harvey said.
First, computers and freezers flew off the shelves as people stockpiled food and worked from home, then upgraded their fridges and washing machines.
Shoppers, who felt more comfortable in Harvey Norman's stand-alone stores than in malls, then moved on to big televisions, furniture and bedding as they continued to spruce up their nests.
Everything was in demand - even taps.
Stock was being bought off the floor, while some consumers were happy to wait up to six months for their order to be fulfilled so they could get the exact product they were after.
It happened at the chain's stores around the world.
All but the Australian stores were forced to temporarily close, but sales just caught up when they reopened, particularly in Ireland.
"Online, click and collect went through the roof - everything," Mr Harvey said.
"It just got better and better.
"We're in a place we've never been before."
As other retailers closed their doors, Harvey Norman contacted suppliers and offered to buy any cancelled orders, stockpiling a massive inventory.
"We made a calculated gamble - mind you, we could have got into trouble," Mr Harvey said.
"We just went nuts.
"So we've gone through close to six months of boom figures that I've never seen in my lifetime."
At the end of July, Harvey Norman owed nothing and, in fact, had cash in the bank.
It wasn't until Melbourne's second wave that any of the chain's Australian stores had to shutter, and Mr Harvey expects the Victorian outlets "will go crazy" when they reopen.
Mr Harvey, who owns the biggest stake in the company, decided he had to tell the market about the recent stellar revenue figures because he wanted to increase his stake.
He did just that the following day.
The company is opening a new store in the Sydney suburb of Hornsby - an old Myer - next week and continues to expand in Ireland and Singapore.
"We're not stopping. We're buying real estate and doing developments all the time," Mr Harvey said.
"We're a little bit scared what might be around in the next couple of years.
"It's best to be aware that it could get a lot worse. No one sees these things and then they hit you just suddenly."
Originally published as Harvey Norman's genius COVID move