HARVEY value as compared to the high share

 HARVEY NORMAN AND JB HIFICHANGES IN SHARE PRICES                                  JB Hi-Fi Limited’s shareholdershave faced a rough year so far because the share price of the company has lostclose to 22% in value during 2017 and the shares fetched less than $ 22. Thisis obviously quite a dwindled value as compared to the high share prices of $31.21 in 52 weeks. Some of the factors that led to the decline in the value ofshares may be inclusive of Amazon.com. The E-commerce of this behemoth i.e.

JB Hi-fidid not even reach the shores of Australia, but the investors were worriedabout the impact that it would bring about once it expanded in the down under(Greenhalgh,2017). There was a considerable anticipation that Amazon wouldbring a significant effect on the retail industry in Australia, where customerelectronics were thought to be especially vulnerable.     Another factor that led to the fall in thevalue of JB HI-FI’s shares was the week consumer spending/sales that year. Oneof the most significant contributors towards that was the shallow rise in wagesand then there were the Increased interest rates from banks which too contributedin altering the consumer spending habits. Generally considering the globalevents that occurred in 2017 also demotivated potential share investors from investinginto their company shares. Another factor that contributed to the decline in itsshare prices were its industry downgrades. Many of the similar retailersdowngraded their customer support services last year. In other words, thetrading updates that they issued in 2017 were very poor which included multiplecutbacks to save costs by negatively influencing their customer service standards,price-beat sale policies.

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Such retailers were inclusive of RCG Corporation Ltd,Oroton Group Limited, Myer Holdings Ltd and Reject Shop Ltd. Due to suchdowngrades, many of the investors interpreted this as a signal of an ailingindustry (Newman, 2017).   The share price of Harvey Norman Holdingslimited also faced a similar fate with its share value falling as low as to 30%in 2017. Harvey Norman Holdings Limited is a retail business which isfranchised and has interests in property development like many other major corporations.Some of its stores operate predominantly under a system of franchisingthroughout Australia.

In the overseas markets, the stores are wholly owned.Such markets are inclusive of Malaysia and Singapore stores exclusively ownedby Harvey Norman. Moreover, The Rick Hart and Clive Peters brands are alsooperated and owned by Harvey Norman (Russell, 2015). The latest ownershipstructure is an essential factor to consider in Harvey Norman Holdings Limitedbecause it is a factor that affects the share price of a company. Harvey Normanhas an institutional ownership of 17.28% and in that case, the company has beenable to face some volatile movements in the share price when block trades areexecuted by the institution in the open market. This is mainly when the amountsof shares that are available are minimal.

Such moves have been causing largeswings in the share prices. Another crucial group in the Harvey Norman HoldingsLtd is the company insiders. Since this team is mainly concerned with themanagement of the company its impact on the magnitude of the trading shares inthe market is minimal.     One of the most prominent owners in thiscompany is the individual insiders who have a 37.15% stake. It has beenextensively asserted that ownership of this kind negatively affects thecompanies that possess a low PE ratio. The public holds a stake of 27.

34% inthe Harvey Norman Company. Such a size of ownership motivates the retailinvestors since they have the collective power in making decisions on some ofthe significant policy decisions for instance decisions on the director’sappointments, executive compensation as well as acquisitions of businesses.Such ownership levels equip the retail investors with the power to make some ofthe initial policy decisions (Rowe, 2017). It, therefore, serves as a positivesign for the investors who want to involve themselves in crucial decisionmaking in the company

Author: Casey Caldwell


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