Harvey Still Has Big Dreams For His Empire

Sydney Morning Herald

Thursday September 2, 2004

James Chessell

Gerry Harvey usually leaves the talking to his finance director, John Skippen, but the Harvey Norman chairman was in fine form at a Sydney broker presentation yesterday.

According to those at the Patersons Securities lunch, Mr Harvey mounted a spirited defence of the retailer's poorly received $176 million profit and gave short shrift to rumours he would retire early.

They were ideas the 64-year-old was only too happy to repeat later in the day.

"The only thing that's going to make me retire is MS, dementia or death," he said. "I could even lose my arms and legs - as long as my head's OK, I've got a chance."

Mr Harvey clarified that if someone did "knock off his head", he would be "f---ed".

The chairman and major shareholder of Harvey Norman, whose outlets include the Domayne and Joyce Mayne brands, said he wanted to pull off "two or three" deals before stepping down.

"Hopefully another Rebel Sport will come along, or perhaps we can establish a toehold in some overseas country," he said.

Harvey Norman has stores in New Zealand, Singapore, Ireland and Slovenia, but Mr Harvey said "the dream" was to get a franchise chain among the larger populations of India or China.

While the market has reacted poorly to the retailer's record profit - the stock has dropped 22c to $2.84 in the past two days amid uncertainty about the sales outlook - analysts (and Mr Harvey) were generally positive about the company's growth prospects.

"Harvey Norman exemplifies much of what we judge to be 'good' in retailing and the cash flow has been able to support significant growth in assets without much change to gearing," Citigroup said.

Credit Suisse First Boston said the group was in a good position with its "high-value, technology-driven products, where sales growth is presently accelerating, given improved affordability and strong consumer demand."

Mr Harvey and analysts were also cautiously optimistic about the retail environment in the lead-up to Christmas even though the federal election is expected to dampen sales growth in September and early October.

"A strong pipeline of electrical products and price deflation-driven volume growth are expected to underwrite sales," Macquarie said.

While some analysts said "modest" store openings might weigh on the share price, Mr Harvey said the company's brand gave it some flexibility.

It has flagged that the old Joyce Mayne brand will be revived as a lower-end furniture, electrical and computer retailer.

Harvey Norman plans to open about five stores in the next 12 months - partly to replace stores that are shifted to larger sites - but Mr Harvey said he would consider more if their implementation was a success.

© 2004 Sydney Morning Herald

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