Speculation is mounting among analysts that the Harvey Norman share price has peaked and that the Company is set to struggle up against a surging JB Hi Fi and a strong Good Guys.
Earlier today Harvey Norman shares were down 2.6% with several brokers telling ChannelNews that they are concerned that the Company will struggle running into the peak Xmas buying period up against strong competition.
Credit Suisse has already cut Harvey Norman to “underperform” from “neutral”. There is also concern that several directors have sold shares in recent weeks including David Ackery the General Manager of Electrical at Harvey Norman.
Ackery sold 350,000 shares for a gain of $1.5 million. Norman Wisdoma, a second Harvey Norman director has also sold a chunk of shares in the retailer. Chief operating officer John Slack-Smith last week sold 1.4 million of his 1.66 million shares for $6 million, the same day Harvey Norman shares hit a 19-month high.
Recently Harvey Norman has reported a big drop in its full-year profit, to just over $214 million, compared to earnings of $358.4 million dollars last year.
The 40 per cent decline comes as margins on consumer electronic goods get squeezed with prices of flat panel TV’s falling.
Also set to impact Harvey Norman is a move by several vendors to build up their relationships with both JB Hi Fi and The Good Guys.
One leading distributor of consumer electronics gear said “Doing business with Harvey Norman is expensive. They demand a lot, from margins to rebates to Co-op dollars for advertising that is more about Harvey Norman than the product we are trying to sell. Unfortunately it is a way of life if you choose to do business with them”.