Gerry Harvey’s comeback

Today’s sales figures from Harvey Norman paint a great picture of how the wider Australian retail sector has done over the last 12 months.

Yes, it’s been tough. The company’s total sales increased 3.8% over the last 12 months to $6.03 million, although like-for-like sales (the metric which takes out factors such as store openings and closures) increased just 1.4%.

There’s also some question over exactly how much profit Harvey Norman is getting out of each sale.

The company’s chief financial officer, Chris Mentis, said in a statement this morning that “given the current macroeconomic conditions, retail margins continue to be under pressure”.

That’s code for – we are offering plenty of discounts to get sales across the line.

But what I found most interesting about the sales data from Harvey Norman was the results for the three months to the end of June, which showed total sales up 6.7% and like-for-like sales up 5%.

There’s little doubt Gerry would be pretty pleased with these results. While the sales figures may have received a little boost from the Federal Government’s stimulus handouts, it’s yet another sign that economic conditions are slowly improving.

Can it continue? Maybe not. Today’s economic forecasts from Access Economics suggest consumer spending will fall over the coming months as unemployment rises.

But it’s also worth pointing out consumer sentiment is impressively high right now. If shoppers can remain upbeat, then Gerry’s comeback can continue.