Harvey Norman founder Gerry Harvey has declined to reveal why his company chose to repay $6 million in JobKeeper grants to the federal government while warning that the current COVID lockdowns are dragging on the economy. could end up in a recession.
After the company announced record revenues for the fiscal year 2021 on Tuesday, Mr. Harvey declined to comment on why his company repaid the grant. He told The Age and The Sydney Morning Herald that he didn’t want to talk about JobKeeper.
“I’m not going to talk about JobKeeper. Every time I open up about JobKeeper, I get in trouble,” he said.
The amount of $6.02 million repaid by the company reflects all payroll subsidies received by the company-controlled entities for the fiscal years 2020 and 2021. A remaining $14.5 million, which was not repaid, was received by the company’s private franchisees.
Mr. Harvey and his company have faced much public and political criticism of JobKeeper since the billionaire resolutely refused to repay the grant earlier this year, despite a huge increase in revenue.
The change of heart comes as the electronics and furniture store reported a year of record sales and profits for the company. Revenue rose 15.3 percent to $9.72 billion and adjusted profit before tax rose 78.8 percent to $1.18 billion.
However, the company’s final dividend was lower than last year, coming in at 15 cents compared to 18 cents in 2020. Mr. Harvey said this was done to preserve cash at the retailer given the highly uncertain trading environment.
“We just don’t know what’s going to happen. Sometime in the next 1 to 6 weeks, all of Australia could be closed. We don’t know,” he said.
“Let’s look at the worst-case scenario when this Delta suddenly turns into something else, and the vaccines don’t work, and then all of Australia is closed. What happens then?”
Last year, Harvey Norman paid shareholders a special dividend of 6 cents after withdrawing the interim dividend earlier this year. Mr. Harvey said something similar could be on the cards for investors if things improve better than expected.
Harvey Norman has been a major beneficiary of the pandemic for its range of office products, household items, and consumer electronics, all of which have been popular purchases for shoppers during lockdowns.
Sales at the start of the new fiscal year have fallen due to lockdowns, with Australia dropping 19.2 percent through July and August, but sales are up 11 percent compared to 2019.
Mr. Harvey said he still expected a huge uptick in trade once states reopen after the lockdown, and said it had happened in every location around the world where the company operates.
However, the veteran retailer warned against letting the lockdowns drag on for too long, raising concerns about their impact on the local economy.
“If it goes on too long, how much damage are you doing to the economy? When that happens and unemployment and the whole thing starts to spike, that’s the biggest danger,” he said.
“The longer you delay this, the more likely you are to end up in some kind of recession.”
The retailer’s shares were down 3 percent to $5.39 by noon. Labor MP Andrew Leigh, one of the firm’s fiercest critics, said Harvey Norman’s refund of JobKeeper should lead to greater transparency around JobKeeper.
“Six months ago, Gerry Harvey flatly refused to repay. Can anyone imagine he would have repaid without massive public pressure?” he said.
“Harvey Norman has given us the best advertisement for greater transparency in the secretive, maligned JobKeeper scheme.”