Harvey Norman told shareholders on Thursday evening the business would be revoking its decision to pay its FY20 interim dividend of 12 cents per share.
Additionally its executive team and non-executive directors have opted to forgo 20 per cent of their salaries and director’s fees respectively for the next three months.
“In the present environment, the Board believes that preserving cash is the most prudent course of action to protect shareholder value,” company secretary Chris Mentis wrote in a letter to shareholders.
The announcement saw shares fall 7 per cent on Thursday evening, from $2.97 per share to $2.76 per share. By the time of publication on Friday, shares had rebounded slightly to $2.77 per share.
The decision will keep $149.5 million of cash in the business and comes two weeks after Harvey Norman revealed a 9.4 per cent increase in comparable sales in its Australian stores for the period of March 1st to 17th.
At the time, chairman Gerry Harvey described to 60 Minutes that coronavirus could be an ‘opportunity’ for retailers in certain categories, noting that sales of freezers had quadrupled and air purifiers had doubled.
Public backlash was swift, and two days later Harvey admitted he was “mortified” that he had come off as a “heartless, greedy old bastard”.
“Now everyone thinks I’m this callous old bastard out making a profit on other people’s misery… but believe me, that was not my intention,” Harvey said, according to SMH.
“I was trying to give a positive view [of the COVID-19 crisis].”
Harvey Norman was contacted but hadn’t provided comment by publication.
The Harvey Norman board’s decision is made in the context of dozens of retailers entering a hibernation state amid a collapsed bricks-and-mortar retail sector, with customer confidence hitting an almost-50-year low.
ANZ head of Australian economics David Plank said confidence on current economic conditions had fallen almost 50 per cent over the last two weeks to its lowest ever level.
“And many other aspects of the survey are exceptionally weak. The announcement of the largest fiscal package yet may stabilise confidence, but much will depend on how the pandemic evolves,” Plank said.
However, according to Plank, there are some glimmers of hope.
“Future finances were up marginally and inflation expectations rose. In fact, there was a sharp uptick in the weekly reading of inflation expectations, which rose to 4.3 per cent.”