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Australian franchisee sales slow amid global growth at Harvey Norman

Nick Hall

In an announcement to the ASX ahead of its AGM on Tuesday, Australian retail giant, Harvey Norman disclosed that domestic franchisee sales were falling, indicating a 1.3 per cent year-on-year drop in aggregated sales.

The homewares and electricals retailer told the ASX that franchisees’ comparable sales for July 1 to November 23 fell 0.2 per cent from the prior corresponding period.

Harvey Norman’s wholly or majority-owned stores across New Zealand, Slovenia, Croatia, Ireland, Northern Ireland, Singapore and Malaysia fared much better however, reporting a 3.0 per cent rise in comparable sales.

Strong economic conditions, including an appreciation in the Euro, the Pound, the Singaporean dollar, the Malaysian Ringgit and the New Zealand dollar were behind the boost in aggregated sales, which doesn’t include Australian franchisee sales.

Malaysia proved to be the standout performer for the period from 1 July to 23 November, growing by 65.4 per cent, with sales in Ireland increasing by 29.8 per cent.

Locally, Harvey Norman owned retail brand, Joyce Mayne opened one store over the period, however, franchisee sales were hit hard by the closure of one Australian franchised complex.

While the international success is encouraging for Harvey Norman, falling domestic franchisee sales compound pressures on the big Australian retailer, with AAP reporting a tense meeting with board members at the company’s AGM on Tuesday.

The homeware retailer’s remuneration report was reportedly rejected by over 50 per cent of shareholders, which AAP suggests raises the prospect of an automatic board spill next year.

Despite rising by 2.49 per cent, shares in the company have fallen 35 per cent to $3.085 compared to a 20-month high of $4.51 back in March.