Harvey Norman Holdings Limited (ASX: HVN) shares are down today despite a positive business update on how it has performed in the month to date, in light of the growing global uncertainty caused by the coronavirus pandemic.
Harvey Norman has seen a 43% decline in the value of its shares since February 20, with its share price declining from $4.81 to be currently trading at $2.75. However, Harvey Norman has fared better than department retailer Myer Holdings Ltd (ASX: MYR), which has taken a 60% hit to its share price during this time.
Comparable sales higher in the first half of March
This morning, Harvey Norman revealed that its Australian franchises, which include Domayne and Joyce Mayne, have seen a 9.4% increase in comparable sales for the period from March 1 to March 17, compared to the prior corresponding period in 2019.
The ASX retailer reported that New Zealand operations have also seen strong growth of 12.4% during this period in constant local currencies, while Ireland sales have increased by 53%. Northern Ireland, however, has seen a 12.4% decrease in constant currency sales, while Singapore operations have declined by 1% and Malaysian operations by 5%.
Most Harvey Norman stores globally remain open
Harvey Norman noted that Malaysian stores have been closed from 18 March 2020 to 31 March 2020, by order of the government. Also, its Croatian store has been shut from March 19 for a 30 day period.
However, it is business as usual for now for Harvey Norman, Domayne and Joyce Mayne franchise stores throughout Australia. Also, its wholly-owned company-operated stores in New Zealand, Ireland, Northern Ireland and Singapore are all open for now.
Apart from the impact of the coronavirus crisis, Harvey Norman shares have been under pressure recently due to a disappointing half year result for H1 FY 2020. Harvey Norman reported a 1.9% increase in total sales to $4.07 billion, while comparable store sales in Australia were flat during the half. Profit before tax fell 4.6% to $301 million, while net profit slumped 4.1% to $214 million.
Will Harvey Norman ramp up online sales?
While Australian stores remain open, it is likely that Harvey Norman will be faced with the same challenges as other retailers, with some consumers staying away from shops for non-discretionary spending.
Online shopping is one strategy that I am sure Harvey Norman will be looking to utilise. The retailer currently does offer an online purchase option and will very likely be looking at strengthening this option in the months to come.
I would expect that competitor JB Hi-Fi Limited (ASX: JBH) will also be looking at ramping up its online option, especially as Amazon has been increasing its presence here in Australia over the past year.
