The end for the struggling Clive Peeters brand was contained in a single sentence in Harvey Norman’s 2010/2011 financial year sales update posted on the ASX this morning: "The Clive Peeters and Rick Hart brand formats have not achieved the requirement for ongoing investment by the company”.
The company then stated: “16 of the 25 Clive Peeters and Rick Hart stores will be converted to Harvey Norman complexes, 2 will be converted to Joyce Mayne complexes, 4 Clive Peeters stores will be closed and 3 Rick Hart stores will be closed. “ Those seven stores are: Clive Peeters in Bendigo, Dandenong, Thomastown and Malvern; Rick Hart in Mandurah and O’Connor and Rick Hart Osborne Park Seconds.
The store closures will result in a charge against the pre-tax profit of the consolidated entity of an amount estimated at $10 million in the 2011/12 financial year.
The report also pictured a fairly gloomy retail market in both electrical goods and computers.
The company stated: “Computer franchisee sales continue to be affected by a cautious consumer and intense competition, however ‘tablets’, ‘Smart Phones’, ‘Ultrabooks, ‘All in One Computers’and new generation DSLR cameras will offer positive opportunities for growth in the year ahead.”
It said electrical franchisees were operating in an extremely challenging environment accentuated by the strength of the Australian dollar. Price deflation in the TV category had continued resulting in reduced revenues but transactions continued to grow.
Overall, the company reported, for the financial year ending June 30, 2011, that sales from the franchised Harvey Norman complexes, commercial divisions and other sales outlets in Australia, New Zealand, Slovenia and Northern Ireland (excluding Singapore) totalled $6.18 million.
Year-on-year this was an increase of 1.7 per cent. However, like for like sales for FY2010/11 when compared with FY2009/10 fell 3.6 per cent.
The end for Clive Peeters came only 13 months after it was bought Harvey Norman in July 2010 for $55 million after Clive Peeters was rocked by accounting scandals and financial collapse.
“The purchase of the Clive Peeters and Rick Hart complexes is a strong strategic fit, adding to our existing brands of Harvey Norman, Domayne and Joyce Mayne, and gives us a complementary two brand strategy in almost every state in Australia,” Harvey Norman chairman, Gerry Harvey, said, at the time.