Gerry Harvey slams vested interests pushing for asset sales as retailer's profits up 36%
Billionaire Gerry Harvey has pushed back against market calls for him to spin off Harvey Norman's extensive property assets, valued at $2.3 billion, arguing he would not listen to merchant bankers, real estate agents and other spruikers who had a deep vested interest in carving up the retailer's properties.
Unveiling half-year results yesterday, which showed a 36 per cent rise in net profit to $111.42 million, the Harvey Norman chairman also said the change in government had yet to deliver a much-needed boost to consumer confidence.
''I think most business people in Australia are very happy there was a change of government, but in terms of 'has that transferred into increased business for retailers?' - there is no evidence of that,'' he said.
''When you talk to business people, I think they exhibited a degree of business confidence when the election took place. But that hasn't gained and it may have even decreased since the election.''
But the ''wealth effect'' from rising house prices and a strong uptick in new housing starts has helped drive better returns for Harvey Norman for the first half of fiscal 2014.
Before-tax profit was $159.64 million, up 60.4 per cent, but this included a net property devaluation of $8.61 million against a $44.97 million charge last year. Excluding property revaluations, profit was up 3.6 per cent to $117.45 million.
Revenue for the half rose 3.6 per cent to $2.99 billion as comparable store sales growth was 4.9 per cent better.
Harvey Norman's property is now valued at just under $2.3 billion, against a market capitalisation for the whole company of $3.4 billion. Following the GFC and a tumble in the share price, the retailer was effectively valued at zero for a time, fuelling calls for its property to be spun off to retrieve lost value.
But Mr Harvey confirmed he wouldn't budge on the issue.
''No, what for, stupid thing to do!
''We have lots of people talk to us regularly about selling our property. But the people that want us to do that, they … are going to make fees out of us. Property managers would make money out of it, analysts would like us to do it because it would add a dollar to the share price, then they can sell their shares and make an extra dollar - so all the reasons people want to do it are vested, vested interests.''