HVN 0.45% $4.42 harvey norman holdings limited

smh - article: harvey norman gets a winner

  1. 3,567 Posts.
    By Mark Todd
    March 13 2003

    A few deft touches from Harvey Norman have turned around Rebel Sport's rundown results, with the sporting goods retailer reporting a record half-year profit and reinstating the interim dividend.

    The results, which included a $10 million net profit in the six months ended December 28, 2002, sparked a 19c rally in Rebel stock to $2.09. Harvey Norman is now well ahead on its investment after paying 83c a share for about 55 per cent of the company a little more than two years ago.

    Managing director Stephen Heath, 35, a former Harvey Norman computer store franchisee, said the new management team had not made many big changes, just many smaller ones at the store level. For example, Rebel is giving individual stores responsibility for buying. The rationale is that the store manager in Geelong probably has a better idea what shoppers want in his area than a national buying team based in Bankstown. In addition to that, Rebel Sport has trimmed middle management and given store managers the opportunity to share in the profits.

    Mr Heath said margins improved slightly during 2002 but the changes were really reflected in half-year revenue of $153.8 million, up 38 per cent when compared to the six months ended September 29, 2001. There were no directly comparable figures, with Rebel Sport changing its balance date to coincide with Harvey Norman's.

    Like-for-like sales were 7 per cent higher for the half.

    Net profit of $10 million was up from the $340,000 that was earned in the six months ended September.

    "It's an outstanding result," Mr Heath said.

    "You've only got to look at other results that are coming out in the retail sector."

    A war in the Middle East and the drought gripping Australia were the main uncertainties. Sales in January and February were up 15 per cent while like-for-like sales strengthened by 8 per cent.

    Rebel declared an interim fully franked dividend of 1c a share, payable May 2.

    Mr Heath said it was nice to give something back to shareholders, but Rebel planned to garner funds for expansion.

    "It doesn't make sense to pay big dividends when you've got so much left to do," he said.

    Rebel has identified about eight sites in Western Australia, South Australia, and Tasmania on which to plant new stores. The launches are expected after August.

 
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