Shares in furniture, bedding and electronics retailer Harvey Norman Holdings Ltd (ASX: HVN) surged 6.7% today to close at $3.69.
That follows a spike in the company's shares from $3.47 on January 9, to $3.78 today, which was queried by the ASX. The company replied, saying it had no explanation for the share surge.
But then chairman Gerry Harvey told Fairfax Media that the company had seen a "big surge" in sales over the Christmas-New Year period, and that he was upbeat about the year ahead.
"The big sales increase was in the December-January period. It's only a week, and there are 52 weeks in a year, but it's a positive sign," he said. Mr Harvey added that they were selling items across the board, but one item which was particularly popular was the Fitbit Flex, a wristband to track your daily fitness.
All those New Year's resolutions to lose weight and get fit perhaps?
ASX speeding ticket
It's a bit surprising that the company received a speeding ticket from the ASX for a price increase of less than 10% over a few days. Perhaps the jump in volumes was more what prompted the ASX to query the price rise. If that's the case, perhaps some investors were trading on inside information – although it's devilishly difficult to prove.
We also note that Harvey Norman did not officially update the market about the "big surge" in sales, suggesting the weeks leading up to Christmas may have been much worse than many expected, with the two 'netting' each other out.
Still, the news augers well for other retailers, including furniture specialist Nick Scali Limited (ASX: NCK), consumer electronics and white goods retailer JB Hi-Fi Limited (ASX: JBH) as well as Dick Smith Holdings Ltd (ASX: DSH). Investors may have priced in very bad news, but it may not be that bad.
Despite the "big surge", shareholders in Harvey Norman are unlikely to see a higher dividend payout rate, special dividends or some form of capital management to return roughly $600 million in franking credits the company still has on its balance sheet.
Not exactly shareholder friendly in my opinion.
