Heads Set To Roll At Harvey Norman After Massive Online Crash, As Chairman Slams Critics

Harvey Norman Chairman Gerry Harvey has finally admitted that the retailer “lost quite a lot of online business” when the Companies web site crashed on Black Friday, the busiest retail day of the year the comments came after the Company was slammed at their Annual General Meeting with the old war horse again taking on the Australian Shareholders Association for simply holding him accountable.

Despite the online crash which resulted in the site being down for over 14 hours during peak trading hours Harvey claimed that Black Friday sales had been “very strong”, but conceded it was impacted by high traffic volumes that saw its website slow to a “snail’s pace” between 8am to 8pm on Friday.

“We lost quite a lot of online business,” he said, adding that many people who couldn’t make purchases online came into a store or phoned the customer line.

Harvey admitted that online management such as Gary Wheelhouse, the head of the Companies online operation and a direct report to CEO Katie Page face a grilling over what has been described by vendors as an “Unmitigated disaster” for the big retailers with many questioning how their Black Friday sales could be up with online being a critical element” of retail sales today.

And in an ominous warning to IT management, he told shareholders “I don’t think it’ll happen to us again, I’ll bet anything.”

Gerry Havey with Alan Stephenson the sacked operator of the Companies Harvey Norman Commercial franchisee that was placed into administration this year.

The multi billionaire also copped a backlash over salary remuneration at the big retailer who has a board that has not changed much in decades.

81.8 per cent of the retailer’s shareholders, voted against the company’s remuneration report and this sent the ageing founder into heart attack territory with Harvey again launching a blistering attack on the Australian Retail Shareholder Association.

“How did you get this job?” Harvey said to Australian Shareholders Association (ASA) former chair Allan Goldin in response to questions about the remuneration report. “Can you ever be positive about anything? You’re a negative bastard,” he said to other questions about franchise operations and revenue.

“You’re back from the dead, you bugger,” Mr Harvey told the association’s former Chairman.

The ASA, who have clout in the market, recommended against the remuneration report and the re-election of Chris Mentis, with objectors flagging a “high degree of concern for misalignment of pay, performance and shareholder outcomes”.

Harvey Norman management team.

They also failed support the performance rights (bonuses) of Harvey, his wife and chief executive Katie Page, executive director David Matthew Ackery, chief operating officer John Evyn Slack-Smith, and company secretary Chris Mentis.

What shareholders are objecting to is a lack of independence at a board level and the fact that executive directors still got a bonus in a poor year.

The ASA claims that the Remuneration Committee who approved the big payments cannot in all fairness be considered independent.

ASA said in its voting intentions report. “It was thought before the commencement of the 2023 year that there was going to be underperformance on the prior year, but to make sure that the executive directors still got a bonus in a poor year they just lowered the entry target.”

Harvey told key advertising partner Nine Media that the company’s management should “absolutely not” bear any responsibility for the overwhelming strike against the remuneration report, arguing that its remuneration was comparatively low compared to other ASX companies.

“It’s just ridiculous,” Harvey said. “The proxy adviser should take full blame.”

Harvey Norman management have finally admitted that they have an ageing target audience with their Australian operation struggling to grow as consumers in particular younger consumers with money shop elsewhere.

Australia was Harvey Norman’s worst-performing market between July 1 and November 25, with sales down 11.6% along with a 2.6% drop in New Zealand.

Despite mounting issues, the retailers share price climbed 4.2% higher yesterday.

Gerry Harvey admits that the average transaction revenue at the mass retailer is diminishing with Australians who might normally spend $3000 on a fridge, washing machine or TV opting to spend $2000 instead.

“They are a little more careful with their dollars,” he said. “We obviously try to attack the middle-to-upper more because your average selling price is higher and your margin’s better, and you’re selling a better product … We’re spending a lot more money on our stores with presentation, so we’re concentrating strongly in that area.”

What he won’t admit is that online retailers are also stripping share from Harvey Norman in particular across their furniture categories.

As the Harvey Norman AGM was under way, arch rival and an organisation that Gerry Harvey loves to bag out, furniture retailer Temple & Webster released a trading update on which revealed that their sales jumped 23 per cent over a similar period, with customers spending $17.4 million across the four-day period of Black Friday and Cyber Monday, representing double what they spent last year.

Gerry Harvey and the Harvey Norman management team refuse to reveal a breakdown of sales across categories.

CEO Katie Page claims that Harvey Norman is more than a retailer, stressing that the business is also a property company which operates in eight countries, so the skills of an executive chairman were needed to support a chief executive.

CEO Katie Page

She claims that sticky inflation had been a problem for the mass retailer.

Ms Page said consumers under 40 were spending large sums on rent and petrol, but the top two-thirds were “absolutely spending with us”. She said the middle consumer, who was being squeezed by higher mortgage repayments, was trading down.