Harvey rides retail wave

By IRENE CHAPPLE

Harvey Norman is riding the buoyant New Zealand retail market, planning a major increase in the number of stores in this country over the next 18 months and flirting with the idea of spinning them off into a separate listed company.

The listed Australian retailer plans to add eight outlets to its current 12, with small towns such as Blenheim, Whangarei and Wanganui due to get a store this year and others, including Timaru, Napier, Whakatane and Rotorua targeted for 2004.

Indeed, any town with more than 20,000 people is likely to get a Harvey Norman store as the company caters to the free-spending NZ consumer.

Each store costs between $3 million and $25 million to open, but "we haven't got any shortage of funds", says chairman Gerry Harvey. "And because we own real estate, we don't really have a problem."

The company is likely to hitch up with local listed retailer The Briscoe Group, which has close connections with Harvey Norman.

Harvey sits on the Briscoe board, is a good friend of its managing director, Rod Duke, and took a 5 per cent stake when the company listed just over a year ago.

Harvey says Harvey Norman can co-exist quite happily with Briscoe, and he says the two will look at sites together and plan to open stores in the same malls.

Beyond the confident expansion plans, Harvey Norman has "long-range thoughts" that it may list a separate company in New Zealand.

The parent company's shares are already listed in NZ but they rarely trade here and Harvey says he has considered delisting them and creating the separate entity.

While Harvey will not put a firm time on such plans - it may be in "one, two, or three years" - a listing could make sense, he says.

"As we open in different countries around the world we might float off some of those companies, as we have in Singapore, where we have a separate company," says Harvey.

However, any listing in New Zealand will not be done in partnership with Briscoe, he said.

"There is a relationship ... [Duke] runs a very good business, we run a very good business and just because of that it doesn't mean we have to go to bed together."

Harvey Norman, which opened in New Zealand five years ago, is heading towards healthy interim profit results, due for release on March 17. Australasian sales were up almost 14 per cent to A$1.59 billion ($1.7 billion) for the six months to December.

The New Zealand sales were well above that increase, Harvey said, but he would not give separate figures.

Briscoe reported bumper sales for the Christmas quarter, and its share price has risen to $2.44 since its shares floated at $1 in December 2001.

The retail sector recorded seasonally adjusted sales of $4 billion for the December quarter, but it has lost some puff since and retailers such as The Warehouse and Hallenstein Glasson have already been punished this year after weak sales.