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Can a picture tell a thousand words?

Value.able | Comments (71)

Can a picture tell a thousand words?

Harvey Norman today gave its third quarter results reporting LFL (Like-for-like) sales down 6.6% and profit before tax down 24.8%. We think a picture tells a thousand words and offer the following two images (above, of the Apple Store in Sydney’s George Street and below, of the Harvey Norman Store in Bell Street Preston…yes, yes I know different foot traffic etc.) as an invitation for you to comment about what it takes a for a retailer to succeed. If branding and customer experience are two to keys to success….

One wonder’s whether reinvestment is a priority at HVN because we believe thats what retailing constantly needs.

Posted by Roger Montgomery, Value.able author, SkaffoldChairman and Fund Manager, 3 May 2012.

INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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71 Comments

  1. Tony Connellan
    :

    Hello to all
    It is interesting to read the various impressions others have of the presentation of both hvn and jbh.It makes me realized that both companies are in a state of transition in their store developments. Perhaps we should not assume that what we see locally, is replicated elsewhere. My experience is that hvn ‘s presentation is far superior to jbh. They (hvn) are clean, well lit, open and well laid out ,with pleasant, and in their section, informed staff. Jbh on the other hand, have staff that are poorly dressed and scruffy.Their store is crowded , untidy and uninviting . The security guard at the exit is a turn off. The computer software at the checkout of hvn however reminds me of the Commodore computers of the early 1980’s.
    Regards
    Tony

      • Peter (Mully)
        :

        I wandered into a JBH store yesterday to buy an iPod accessory and was pleasantly surprised at how busy it was. The item I purchased was competitively priced, the service was absolutely first class and there was a constant queue of around 8 people in line at the tills. If this is anything to go by, predictions of this businesses’ imminent demise may yet prove to be premature, if not completely wrong.

      • Mully
        :

        It was the JBH store in the Westfield Shopping Centre Hornsby on Sunday around 3:00pm.

    • Andrew
      :

      Hi Tony,

      That was a really good point. This is the beauty i think of individual prefrences and observations. All the positive things you say about HVN sotres and all the negative things you say about JBH stores are polar opposite to my opinion on the exact same things.

      i can completley see how you came up with those opinions. I do however disagree but that is just my individual opinion.

      I think all the aspects you mention of JBH actually go straight to the heart of what the JBH brand is and why i think they are light years ahead of HVN.

      Where as you say the HVN stores are clean, well lit , open and laid out, i might say it is dull, boring, too polished and soul less.

      Where as you say that JBH is untidy, crowded etc, i might say that it is a bit “alternative”, “edgy” and more in touch with the target market and reinforces its goal of being the lowest cost and there for lowest price retailer. The staff to me, always come across as nice and have a genuine interest and passion in the things they sell where as i have got the feeling it is more of a transaction and a reciting of a script at HVN.

      I actually think that the “poorly dressed” staff are a really great asset, The staff, are actually the target market. The staff are exactly the same type of people who would be shopping at JBH if they were not working there. This makes JBH a more attractive option for customers than another store and helps create and nurture what i like to call the “emotional attachment to the brand”. It is “their” store.

      Just some thoughts there and would be really interested to see what others think.

      • tony connellan
        :

        Perhaps Andrew it is an age difference between the two of us.I am 70
        Regards
        Tony

      • tony connellan
        :

        And perhaps Andrew age would also show up if we were to compare portfolio selection,not that I am suggesting we should do that on a public forum.Perhaps “age and portfolio selection” might make a good topic for discussion on this blog.
        Disclosure: I have never owned hvn,and have disposed of my jbh

      • Roger Montgomery
        :

        I think you are spot on Tony – the perspective from your respective ages will indeed be a contributing factor. If memory serves correctly, I remember Andrew previously disclosing he is Gen Y.

      • Andrew
        :

        Hi Tony, Roger,

        You are right, i am gen Y so that is why there probably are vast differences between how we feel about the same companies. The good thing is, we are both right.

        I think age/individual prefrences etc will always have some type of bias in the companies/investments we consider as there will be differences between everyone. That is why i found your post so interesting Tony and why i was compelled to reply to it so we could perhaps get some other thoughts on this.

        keep up the good work guys.

      • Ash Little
        :

        I can attest that Tony is a very spritely 70 yo and cooks a mean steak and had a great coffee machine.

        Oh I forgot to mention a great Buffet like portfolio as well

        Cheers

  2. Michael Horn
    :

    There is a line of similarity between HVN and TGA in that the former sells nearly all the items that TGA rents (operating leases, effectively), or sells via financial leases. Both substantially transact their business in shops. Their respective styles of business and target demographics sets them apart.

    Weeks ago I mentioned that at http://www.macquarie.com.au/dafiles/Internet/mgl/au/apps/retail-newsletter/docs/2012-03/TGA150312e.pdf one could find a valuation for TGA. The Macquarie analysis states that the $1.78 target SP was calculated by the EV/EBIT methodology. The figures provided should allow one to retrofit the calculation, and I wonder if someone could do this for me so that I can double check my hazy understanding of the EV/EBIT methodology to derive a target SP. If it is not too big an ask, could a potential responder extrapolate that logic to WOW. Or any other stock that is a closer fit to TGA than WOW. It is difficult to find a stock that mirrors TGA’s profile, but a steady income stream is probably the most salient factor – low debt, which WOW does not have, is another

    In loose terms, I gather that Macquarie multiplied TGA’s expected EBIT by a bit more than 6, then poked in some adjustment to accommodate its net debt and cash holdings. Because EBIT is by definition exclusive of tax, a multiple of 6 suggests a RRR of 16.67%. Because Roger’s methodology is EPS based, which is an after-tax metric, the equivalent RRR for an after-tax methodology is 11.67%. An EBIT multiple of 7 would equate to an EPS-applicable RRR of 10%, or so I assume.

    TGA’s annual report is due on 22/05/2012, and as I hold 430,000 TGAs (a massive bias relative to my total net worth), I want to ready myself to perform a thorough analysis of TGA’s intrinsic value using a few valuation methodologies. I believe TGA is undervalued for a variety of reasons, which I have written about in this forum and others, so I’ll not elaborate, particularly as I would be able to elaborate with more authority when I have completed my upcoming analysis.

    • Andrew
      :

      Hi Micheal,

      In order to work out what you wish and looka t that relative to your situation with TGA i think you need to try and work out what the 2013 EBIT is for all those companies that you seek to see.

      Now i may be wrong here, but my interpretaion of EV/EBIT brings up some potential issues as to how reliable this measure is as a valuation tool (however in saying that i will quite happily listen to those opinions that differ so i can consider them.

      The EV or enterprise value loosley is Market Cap plus debt minus cash. I have a couple of problems with this metric based on my understanding of it. The main being, that as the market cap involves share price you are effectively letting the market price effect the valuation of that specific business. This goes against my education in value investing which i have studied and applied and believed in where the business is independent of the market. This is the same problem i have with P/E ratios. I try to keep the market price out of any valuation and only use it when looking to see if there is a discount.

      • Michael Horn
        :

        Thanks for the reply.

        Like you, I think the EV bit of EV/EBIT does not make sense – its like guessing a man’s age based on his age, and so I assumed the users of this methodology simply pick a multiple somewhere between 5 and 10, and multiplied the EBIT by it, perhaps fiddling the figure to accommodate debt and excess cash, just as one fiddles the RRR using a Skaffold-style valuation methodology. How one does the “fiddling” is what I wanted to know.

        For a stock like TGA with low debt, and which pays tax at 30%, picking an EBIT multiplier is something like inventing a PER – you start off with a baseline RRR, and tweek it for risk and the like, then divide it into 1. Thus if the final RRR is 1/7, the EBIT multiplier is 7, and to convert this into an after-tax PER, divide it by .7 (because tax is .3) to get a PER of 10. The latter is no different to the RRR used in Skaffold style valuations, and in its basic form, inventing a target PER (1/RRR) and multiplying the EPS by it to get a target SP gives the exact same result as EPS x Equity per share x ROE/RRR. How one “fiddles” the RRR to accommodate debt and other things is just as valid a question for the Skaffold and PER approaches to guesstimating a target SP. I assume that Skaffold addresses growth via the adjusting factors that spring from the table that relates to the non-payment of dividends.

        As an aside, a few minutes ago, I checked the Macquarie analysis which values TGA at $1.78, and I realised that Macquarie used an EBIT of $40 million, whereas for YE 30/03/2012 the EBIT is about $50 million. Unless I can see the numbers and the arithmetic, and understand them, I put little faith in valuations, other than as catalysts that set me off to do my own research.

      • Michael Horn
        :

        I erred in my last paragraph – TGA’s EBIT for YE 30/03/2012 could be $40m, not $50m. The figure on which I based my $50m estimate related to the operating EBIT. There were more expenses on the next page of the mid-year report, and on balance they would tend to reduce the EBIT for H1 to about $21.3m, so doubling that gives a rough estimate of $42.6. Maquarie rounded this to $40m.

      • Michael Horn
        :

        That sentence that included the word “assume”, was sloppy, I know that the retained-earnings arithmetic to uplift the RRR is only part of the story, because Skaffold provides earnings forecasts (wherein skulks growth) and it provides point-in-time IVs related to the forecasts. One can calculate the final RRR used (adjusted for risk and other things), but one does not know all the assumptions, facts and arithmetic used to get there. If, for instance, debt/equity has a bearing, then what bearing, and what debt/equity ratio was used?

        I do not expect Skaffold to reveal all its underlying assumptions and calculations, because this is intellectual property that you would be a fool to give away, but for me it is difficult to assess the validity of its IVs when they differ from mine, because important considerations are hidden.

        On a positive note, your ROE emphasis has been a game changer for me – I knew about it, but it was at the edge of my mind, whereas now I use ROE as a central criterion for selecting candidate stocks. I use Skaffold with other online tools available via Westpac or Comsec to short list stocks for consideration. I find your blog excellent, and visit it frequently. Being able to contribute posts to it is of great value to me, because writing posts to be read by some savvy readers takes consideration, and this helps me firm up my thoughts, and in the process discard some of them.

  3. Fernando
    :

    Two things HV could do with its business model.
    first one is that HV should be concentrating on selling furniture, beds etc. and could create a different brand for selling its high tech items. or let Domayne do the furniture, bed selling and HV could just concentrate on high tech items.

    HV should also have an online service in the shops that beats any online retailers.

    The third one is to perhaps to merge or create a joint venture with BestBuy in America.
    Can’t compare HV with Apple, as Apple build their own products.

    Roger could you use Skafold to track BestBuy, perhaps its not a great business as it seems?. thanks.

  5. Alex
    :

    HVN needs to succeed by improving ROE to shareholders. It’s not about glamourous store fronts, or expensive tenancies. It should be all about getting a better return on sales.

    Customers will see through all the “glamour”. If HVN can get it’s costs down they can compete better with JBH, Officeworks and the Department stores. Even the online retailers. They are their competitors. Not Apple

    To this end HVN needs to:

    1/ Reduce their silly wasteful staff work practices. Find a way for Sales staff to still get their retainer and sales incentives *without* having to waste time by walking up to the cash register with the customer.

    2/ Spend some money on improving their supply chain and in store computer systems. These appear to be more than 20 years old

    3/ Make sure *nobody* leaves the store without a purchase. Once engaged with a customer, staff should get the sale. If HVN doesn’t have stock, they should immediately order the product direct from a wharehouse (even if stock is held in China). Staff should be able to search online in store (just like a customer does on their iphone in store), and price match with say Amazon and arrange free delivery straight from a store in China to the customer (to keep costs down). In other words, once demonstrating the product to the customer, *make darn sure* they don’t walk out the store and order on line.

    Each individual store needs to turn into a giant online “store front”. And they need to drastically strip out staff costs.

      • Alex
        :

        Of course this isnt to say the store front’s arent need of a spruce up. Small cosmetic changes wouldnt cost alot. This should be done at the same time as a complete makeover of these shop floor management policies. This would then announce to the world that HVN has changed. That it’s joined the 21st C.

        I’m not arguing HVN should get rid of their highly successful franchise model. Or their verry low cost retail locations, and all of a sudden move into the major shoping mall’s. These are the strenghts of the business. Leave this alone! One of the mairn reasons I still shop at HVN is I can always get a park, and I actually like talking to sales staff!! You never get this experience shopping at HVN competitors. In other words HVN should retain their highly successful sales staff incentives, but modernise the way staff deal with customers. Give them all ipad’s so they can log their sales on the spot. Turn their outdated workstations into internet ordering kiosks… oh and get rid of those 1980’s light blue vacuum cleaner saleman style uniforms……

    • Michael Leslie
      :

      Apple is in front now but what about the future. I am a dedicated Apple consumer (once you start with on product it is hard not to buy more – becomes addictive which is great for sales).

      My first purchase was an iMac which I really enjoy. Recently it would not wake up after sleeping for the night. I took it to the Genius Bar at our Charlestown Apple store. After a few minutes “the genius” told me that the easiest was to solve the problem would be to delete everything and reload it from the Time Machine where it was backed up. As there was plenty of space left on my drive I agreed.

      Anyway, to cut a long story short, the computer told us that after deleting the contents of the beast there was not enough space to download what was saved on the time machine. I was then given a choice of deleting photos, pages or numbers or buy more space which could not be purchased in the Apple store! I indicated that I was not happy with any of these options and asked the problem to be fixed. I then left the store with computer and time machine and sought my tech savvy son in law. He fixed the problem so now I have everything back on my computer and working properly.

      Apparently, the initial problem was solved but I inherited a much greater problem. Solved with a sledge hammer.

      I lodged an online complaint and received a sympathetic phone call from an Apple supervisor.

      Unless Apple can solve these problems I shall not be recommending their, so called, “genius bar” to anyone. Apple has a great product but it needs to offer real real after sales service otherwise it will be eaten by Harvey Norman!

    • Paul Audcent
      :

      Actually my comment referred to your Harveys blue and white shade, but I have to say Roger our HVN stores in and around Hobart are a lot newer and brighter. The JBH one is a bit dowdy, however I do buy from JBH, perhaps price and service is the real outcome with all these retail stores!

      • Andrew
        :

        Sorry if it is going on a tangent here but it is in reference to JBH branding/stores.

        I was looking at our local JBH and it’s yellow and black signs. A thought came to mind that perhaps during the branding stage when JBH started up that maybe the powers that be read about the story behind how the yellow taxi company in NYC chose yellow.

        Apparently it was worked out that yellow is the most stand out color and there for not blend in with anything else. (I can’t remember the specifics but this is the jist of it).

        I would be interesting to know whether that played a part as I think it links in to what we are talking about here. A JBH store does appear to stand out from the rest and my experiences are that they are usually the busiest in a centre. However, apart from the yellow (and some tv’s etc in the window) their stores are not necessarily any different.

      • Matthew R
        :

        Yellow is a brighter colour than other colours because it stimulates two of the three “colour sensors” in the eye (trying to keep this simple)

        That is the how….

        The why is a bit more difficult to prove, but it has been suggested that having eyes more sensitive to yellow is a biological advantage when you live on a planet where the source of light (the sun) is yellow.

        Yellow always stands out against backgrounds, especially dark ones & it always appears bright. If you want a colour to grab people’s attention (ie to alert motorists that the direction of traffic is changing at the upcoming set of traffic lights) then yellow is a good one.

      • Mike Hall
        :

        Have you ever noticed foreign films shown on SBS are subtitled in yellow. That’s because it shows up best on a multi-coloured background.

        And by the way – yellow cars have the least number of accidents, according to the NRMA.

  7. Andrew
    :

    Hi Roger,

    very interested in the replies to this blog as many would know, i quite like retail companies.

    The two pictures above do paint a great picture about where both companies are at currently i believe. One is sleek, modern and exciting whilst the other is old, non-descript and looks a bit out of date.

    I am not saying that HVN should try to replicate apples store, that would be counter productive but they do need to re-invest in their shopfront to put their brand in a situation where it can say to people “come inside and spend your money here”.

    The buildings should reflect the personality of the brand and should be exciting and enticing. By HVN not re-investing in the store above the consumer will not be inclined to enter unless they were really loyal to Harvey norman. Compare the HVN store to any JBH store and you will see a difference.

    Brand experience is important to the bricks and mortar retailer, especially with the increased online competition. They need to offer something intagible that online competitors cannot.

    Lets ignore the outside and focus on what you get inside the apple store. Yes, you can buy apple products and accessories. But it is more than that, you do have a brand experience, whilst you are inside you are in the Apple world. You can see and try all the products, get courses and sessions on how to use various apple products and speak to “geniuses” who can solve almost any Apple related question for you. The customer experience is more than just walking inside and performinig a transaction. The Apple store, is in fact a blueprint to how i believe bricks and mortar retail should be.

    What does a retailer need to succeed?

    They need an exciting offering that offers an intangible experience to the customer.

    They need the product knowledge to answer any question the customer asks and be able to answer in plain english, they need to have staff that are in touch with the brand, they need the product variety that the particular market is after and they need an edge whether it be through differentiation or price. They also need to have the finger on the pulse of the industry/market and be able to change with it as retail can be a very volatile place where fashion, fads and technology can quickly come and go.

    • Andrew
      :

      If i read the latest from JBH, it seems they agree with me a little bit, i just looked at their presentation to the macquarie conference and they say on slide 9.

      “Successful retail formats engage and entertain customers. The growth of online has heightened this need for differentiation. The JB model has always engaged, educated and entertained customers with our product range, merchandising and knowledgable staff. JBH must continue to innovate to maintain our relevance to customers.”

  8. Nick Gonios
    :

    Roger

    Great blog post!

    Apple store design chief Ron Johnson has been headhunted recently to become JC Penney’s CEO. Great move in my opinion as he talks about the fact that physical retail stores have lost their sense of a theatre experience together with memorable service.

    I was watching Gerry Harvey being interviewed on the ABC recently and thought to myself ‘this guy does make some sense and comes across as a true Aussie battler’ but that market (of the 1980s) has moved on in my opinion. The overall market is more sophisticated in how it operates in today’s world.

    Simple. I don’t see any intrinsic value in Harvey Norman at the moment.

    Nick

  9. Simon
    :

    A little harsh Roger comparing a downtown city store of Apple (perhaps on the opening day or the day of a new release) to a HVN store out in suburbia. Here in Perth Sunday shopping in suburbia is a new thing and last weekend we went out to buy our first digital TVs (yes I know way behind the times) and the carpark at HVN was packed and the store very busy. However, not far away the carpark of the JBH store was empty because they have chosen not to open on a Sunday. Pitty I still hold JBH shares.

    • Roger Montgomery
      :

      Thanks Simon,

      Be sure to take a photo with your iphone and send through any pics to roger@rogermontgomery.com of full retail carparks and queues out the front. Yes the comparison was harsh. I did admit that in the text. Really appreciate your inisghts and scuttlebutt. HVN is still reporting revenue with the word ‘billion’ after the numeral. They are selling lots of ‘stuff’.

  10. Craig
    :

    It is much easier to succeed when you have compelling products and can easily shifts units without the need to discount.

  11. Seany B
    :

    Great post Roger, food for thought for sure. However, I have another thought about HN. There are a number of computer retailers that are located near me, and I would say their shopfronts are much, much worse than the Harvey Norman place pictured, but most of them are really busy becuase of their pricing. The problem with HVN is that they are not competitive. Recently I bought a brand new fridge. HN price was $1300 including a 2 year warranty. The place I bought it at eventually, which also has a shopfront was $1100 and that included a 5 year warranty, not even close. I believe the consumer these days is much more informed and shop around like they have never done before, we can thank the internet for that. No matter what HN do, sales will continue to slump if they cannot become more competitive on price. If I traded CFD’s I would be shorting HVN for sure.

  12. Darren
    :

    HN will argue ‘grassroots’ etc, wheras Apple is a keystone retailer. Westfield would bend over backwards to get Apple in a centre, but Apple know they don’t need to. HN meanwhile are a commodity. And being a franchise, you will always get many poor peforming stores. It’s simply leverage on the market. Sorry Harvey Norman, your time to lose. Likewise JBHifi.
    Differentiator:- products people want are similarly priced in apple stores as online. Unlike the aforementioned whereby they can get great service for same products and the vendor store, but elsewhere all HN can sell are iron’s, alarm clocks and HDMI cables.

    • Roger Montgomery
      :

      Good points Darren and the point you make about ‘commoditisation’ is spot on. I note Apple are in plenty of ‘centre’s including Hornsby Westfield etc etc…

  13. greg hills
    :

    These two pictures clearly show how a modern store front and layout is much more enticing to retail customers than an outdated one, with the competitiveness of online buying retailers need these advantages to entice consumers to get out of there homes and into there stores.

      • Dave
        :

        The Harvey Norman store I went to earlier this year looked a bit like that, tired and old school. I was shopping for a lounge and had done a bit of research on the net beforehand. I looked at quite a few places including Nick Scali (which I had not heard of before I started reading this blog) and thought this smarter, more modern brand would get my business. Harvey Norman was my last choice and I was surprised to find they ended up with my money. They had a large choice and I could take the Lounge with me on the day . Nick Scali was a 12 weeks wait I think – no pickup. I am no fan or advocate for Harvey, but they got my sale this time. Probably could describe it as life support rather than a new lease on life.

  14. Benjamin
    :

    I think image is important and in the 21st century I like the idea of being part of whatever the Apple store is selling. The HN looks a bit tired. Ok for a furniture shop but not enticing for a technology hub. There is no reason why HN could not be become a leader instead of a catchup retailer.

    • Esther
      :

      Even as a furniture supplier HN disappoints. Simple comparison to the American pottery barn or Neimann Marcus or even our Ikeas shows a clear divergence of all elements; style, design and the prices are telling of HN’s overall strategy. Too little too late.

    • Andrew
      :

      Nice point Benjamin, the Apple store is a great example of exciting the customer so that they see the store as a destination they want to buy their products from. It is what i call the intangible experience.

      In the above Apple store for example it is especially good as literally across the road their is a JB Hi-Fi store that sells products cheaper than what you can get in the Apple store but yet, the Apple store every time i have been in it has always been busy and pumping.

  15. Bret
    :

    I hope this picture of Harvey Norman was taken on Anzac Day. In all seriousness I was in JB the other day and it was real quiet on a weekend. I do not go into their stores much anymore but I remember them being like an apple store years ago. I really don’t know which way they will go. On my birthday last month, I was surprised that I received nearly all of the same gifts. ITunes music vouchers! In my mind that made me think about JB’s business. I hope new gadgets come out soon that become the cool new toy. Does anyone know how their online radio service is going for them or has it come out yet?

    Bret

      • Steve
        :

        Hi Bret, in answer to your question I’m trialling JB Hi’s JB Now music service and it’s absolutely brilliant. It’s not a radio station but is a subscription service to a massive online music repository. You don’t buy the music but rent access to the library, so it’s not the same as iTunes. Sony have a similar service but the JB one is cheaper. You just search for want you want then play it and it streams the music in real time. They’ve only just put out iPhone and Android apps and you can also download music onto the device and play while offline. Only problem I’ve found is that not all artists are covered but the library is growing all the time. I’d say 90% of music I’ve looked for is there. They have a one month free trial and I’d recommend checking it out. One thing I”m not sure of is how the business model works. I assume they track how many times a song is played and pay the artist a royalty? The strategy is a good one as it will help them earn revenue to replace falling physical CD sales.

    • Andrew
      :

      Hi Bret,

      Very interesting observations, in the shopping centres i go to, JB stores are still the busiest however as i have said before there is a difference between having lots of people inside and lots of people in the queue for the registers. You have given me something to ponder.

  16. Kent Bermingham
    :

    Roger, talk about provocative..
    Maybe HVN can lease an office space above apple to advertise Internet linked office furniture for Apple customers to use their Computers and i phones etc.
    HVN needs to layout their large, bulky furniture etc and this is too expensive in Pitt St.
    Talk about kicking a dog when it is down.
    I do not own HVN or Apple shares at the moment.

      • Matt
        :

        To be fair… That pic is not the common look for most hvn stores…. Also dick smith spent multiple millions reinvesting and it did nothing for them… Jb have newer stores and a lot of older ones…. Apple are very new and stylish no doubt but they are their own brand and funding those shops is a corporate marketing expense. Throwing good money after bad is not smart either in bad retail times. Retail has issues much deeper and complex than a shopfront in preston… My local hvn has just been renovated. I think the more important issue for retailers is what will they do differently to rejuvenate the in store experience.

      • Scott W
        :

        Roger I think that it is always going to be tough to convince or force the independent owners of Harvey Norman departments (my understanding is that even in the 1 store they can have different people who own different departments) to reinvest into their business when they perceive the writing on the wall is that they will be losing money. The other factor is that many of the franchise owners have only ever been in business through the good times and they are struggling to deal with tough times. Jerry Harvey forced some tough conditions on them and some of them resented having to fund the interest free terms for their shoppers, and they make next to no money from the photo print business either, that is just a tool to drag people into the store. But it doesn’t work as well now when Officeworks have the hot photo price every day of the year.
        Speaking of photos the former JB Hifi boss timed him own exit from Kodak stores well, selling many to the company and later exiting and finding his way to JB where he also rode the wave to a well times exit. Richard is a very smart guy and when I see his exit from where ever he ends up next, I will consider selling any shares I own there.
        Will JB shares head down the path of Kodak?

      • Kent Bermingham
        :

        Yes I agree they need to continually reinvent themselves with the changing market, my comment was only targeted at the complete polar opposite photos.A picture can tell a thousand words.

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