Go Harvey Go - if it wasn't for the leases

GERRY HARVEY, the billionaire owner of Australian retailing giant Harvey Norman, must regret the day he set up his first Irish store.

That was certainly the impression he gave at the company’s agm this week in Sydney, to which our correspondent in Oz, Gretchen Friemann, popped along.

Harvey voiced his dismay over the company’s disastrous foray here, describing Ireland “as an unsolvable problem”.

He offered shareholders a bleak assessment of the Irish business, conceding sales had gone from bad to worse recently.

“I just can’t believe we got ourselves in this much trouble,” he admitted.

Harvey Norman opened its first Irish store in 2003. It now operates 14 outlets in the Republic and two in the North.

This rapid expansion is seen as the root of the retailer’s problems as it is locked in to expensive long-term leases on which it has given parent company guarantees.

According to analysts at the Sydney-based Macquarie Bank, Harvey Norman’s annual rental bill on its 16 Irish stores is 20 million Australia dollars (€14.7 million) with lease terms running to 20 years. The bank has calculated exiting Ireland would cost the group about 400 million Australian dollars and said it was not expecting the retailer to break even at its Irish unit until 2015.

Sales here fell 3.9 per cent in the third quarter.

Ouch.

So what should it do?

The message from many analysts is clear: “Go Harvey Go.”