From the AFR, following yesterday’s attack on Harvey Norman:
“People go out on limbs to get publicity and they dig things up that get them publicity,” Mr Harvey toldThe Australian Financial Review. “This guy is on a mission – we know where he’s coming from – and we are entitled to refute his allegations or ignore him.”
…“Because he sees it nowhere else he says it must be wrong,” he said
…Harvey Norman increased tactical support to franchisees in the form of rent, marketing and franchise fee relief from $60 million in 2011 to a peak of $128 million in 2013 – an average of $152,424 for each franchisee.
Analysts said tactical support had fallen in 2014 as trading conditions improved and was likely to fall this year.
…Mr Harvey confirmed Harvey Norman needed to refinance $370 million debt in December and said the company was in talks with financiers.
“The big picture is that our borrowings are 23 per cent of shareholders funds, which is very low by all standards,” he said.
Better not to responded, Gerry.
My take on this is that the model is untested. Until it lives through a shock in which commercial property values fall alongside sales and tight credit conditions then Gerry is talking theory.
One thing is certain, after 23 years without a deep recession, all sorts of fair weather, pro-cyclical business models will have popped up.
