Harvey Norman chair Gerry Harvey expects business bankruptcies to tick up amid higher expenses
Harvey Norman chairman Gerry Harvey expects lots more businesses to go bust in the next 12 months as they face higher and potentially ruinous expenses such as wages and power bills.
Mr Harvey on Friday said excessive costs of doing business were already proving to be the biggest challenge for the furniture, electronics and white goods retailer.
“If you’re in an industry where you haven’t got the ability to increase your margin or your sales, you’re going to really suffer,” he told The West Australian.
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By continuing you agree to our Terms and Privacy Policy.“I think that a lot of businesses in the next 12 months will be put under enormous pressure and you might see more business bankruptcies than you’ve seen for a very, very long time.”
Mr Harvey’s comments came after the retailer revealed net profit slid $187.07 million, or 34.7 per cent, to $352.5m in the year to the end of June.
Total sales fell to $8.86 billion compared with $9.19b reported a year ago.
It’s a set of results Mr Harvey hoped could have been better “but it’s been a fairly difficult year that’s got a bit better in the last six months”.
“I’m just looking to what might happen this year and the indications at the moment are that we should get an improvement this year,” he said.
“We’ve got a million more people here than we had two or three years ago . . . all those people have got to buy a fridge or a lounge.”
Already, Mr Harvey is focusing on artificial intelligence-led products he says will enable the retailer to claw back a bigger share of the consumer dollar.
“(AI) is going to give things like refrigerators, washing machines, TVs, computers and phones a lot more features and make people (feel like they) need to buy them,” he said.
Harvey Norman plans to ramp up its promotional activities of generative-AI products to customers, with Mr Harvey saying it was already seeing positive results.
“We had a budget for June, July August for AI computer sales, we hit that budget exactly,” he said.
“We’re expecting October, November and December to be considerably better in that product category.”
The Australian business reported profit before tax fell 26.7 per cent to $273.56m in the 2024 financial year.
