Harvey Norman Plans to Close Stores

Gerry Harvey has said that they are planning to close up to ten Harvey Norman stores in the next six months due to the economic slowdown. Harvey Norman (HVN) has 192 franchised stores in Australia and 28 stores in New Zealand, as well as outlets in Ireland, Singapore and Malaysia. The international retailer has revealed a decline in store sales up to 5% and margins have been cut by 10%. The retailer's pre-tax profit fell by 32% in the three months to September.

The Harvey Norman Chairman has said “Our market share has increased but our margins, especially in electronics, computers, cameras and plasma televisions, have never been so low. It's a pretty difficult position and in my 47 years in business, I have never seen our margins hit so badly”, “We don't have any great problem in Australia. We don't have big bad debts and all the fundamentals are OK. This thing is an American contagious disease that we've all got. It’s the manipulation of money that has gone out of control”. In an interview with ABC Radio Harvey said that “We're looking at closing not a lot of stores, but some stores between January and June (2009)”.

Harvey admitted that the retailer was looking to open new stores as well. Every retailer in Australia was under stress at the moment. He said about his competitors that “I don’t think there’s one strong person left”. At the time, Harvey also said that the group was reviewing its three-tier brand structure, preparing to slash marketing expenditure by about 20% early next year and putting on hold international expansion plans. Harvey expects some people will spend their cash bonus before Christmas but he added “How much, I don’t know” as Eligible families and pensioners start receiving their share of the government's $10.4 billion economic stimulus package on Monday.