Retail king Gerry Harvey has warned that many retailers may close their doors for good as the toughest conditions in half a century get worse.
Mr Harvey’s bleak outlook came as Harvey Norman announced it would close its 25 underperforming Clive Peeters and Rick Hart outlets and reported a fall in group like-for-like sales.
“There are an enormous number of retailers out there that will close, they’re just not going to make it,” Harvey Norman chairman Mr Harvey told AAP.
“Online overseas and locally, deflation, consumer confidence and saving … you put all those ingredients into a pot and you’ve got a disaster for an awful lot of retailers.
“I’d hate to be selling clothing or sporting goods, but electronic goods, computers, those things … if you’re in that segment – and Harvey Norman is – you’re getting a hiding.”
Retail spending over the past financial year was at its weakest in almost 50 years, the Westpac/Melbourne Institute index of consumer confidence revealed on Wednesday.
Harvey Norman, posted a 1.7 per cent increase in global sales on Wednesday for the year to June 30, earning revenues of $6.18 billion.
However, like-for-like sales – those that excluded new stores – fell by 3.6 per cent.
The Clive Peeters and Rich Hart closures added to the retail sectors’ woes.
Premier Investments retail chief Mark McInnes recently flagged the closures of its loss-making Just Jeans, Portmans, Jacqui E and Peter Alexander outlets.
Harvey Norman on Wednesday reported improved sales revenue in furniture and bedding franchisees but fell for electrical franchisees.
Heavy discounting and a stronger Australian dollar adversely affected revenue from its overseas stores.
City Index chief market analyst Peter Esho said Harvey Norman was still in a healthy, profitable position despite the poor overall retail climate.
He said the latest falls in like-for-like sales were better than those earlier in the year.
The company was well diversified with a property portfolio, healthy franking credits and product diversity but needed to embrace online selling, he said.
“They are still at the mercy of product development by suppliers, Samsung, Toshiba … there are vulnerabilities in that type of business model because anyone can set up an online store and sell those brands or ones from China,” Mr Esho said.
Mr Harvey rejected those arguments, saying equivalent businesses to Harvey Norman elsewhere in the world had not made money selling product online.
Shares in Harvey Norman jumped 16 cents, or 8.89 per cent, to $1.96 on Wednesday but have fallen from above $3 since April.
