Harvey Norman has started closing stores with senior franchises telling ChannelNews that “more store closures are to follow.” The decision to not renew leases on underperforming stores comes at the same time that the Company has shifted 24 franchisees into new location in an effort to bolster falling sales.On Monday, as senior staff was being told that they were being moved into new jobs as of March 1st (see original story here including the names of all people being relocated),Harvey Norman management announced that 36 staff at their Westfield Woden store in Canberra were being offered redundancy packages or being relocated to other stores outside of Canberra.
Harvey Norman COO John Slack-Smith claims that the decision not to renew the Woden lease after 30 years of trading at Woden was based on “commercial grounds”.
A NSW franchisee said “This is just the start, I think you will see more store closures as leases become due especially in locations where the landlord is not going to take a cut in their lease deal”.
They added “Westfield has several organisations wanting to get into their shopping malls so they are not going to take a bath on a lease just because Harvey Norman is performing poorly. Where Harvey Norman is a key tenant the situation could be different”.
Slack-Smith has said that he does not know whether all staff could be found jobs or offered redundancies.
He told the Canberra Times that Harvey Norman was not in a consolidation frame of mind in the ACT.
”In the retail industry, having a growing store presence is important to the overall model,” he said.
”So if your strategy is to contract then all you are doing is increasing the potential opportunity or risk of allowing your competitors to grow.
”The decisions about closing stores or reducing your footprint are ones not taken lightly, because we absolutely want good old-fashioned economies of scale where we’ve got lots of shopfronts.”
Last week Harvey Norman chose not to announce their sales figures for the last quarter a move that has upset the investment community.
Instead the Company has chosen to reveal their sales figures at the same time that they announce their profit results in March.
