HARVEY value as compared to the high share

 

HARVEY NORMAN AND JB HIFI
CHANGES IN SHARE PRICES

 

           

 

 

 

 

 

                JB Hi-Fi Limited’s shareholders
have faced a rough year so far because the share price of the company has lost
close to 22% in value during 2017 and the shares fetched less than $ 22. This
is 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 of
shares may be inclusive of Amazon.com. The E-commerce of this behemoth i.e. JB Hi-fi
did not even reach the shores of Australia, but the investors were worried
about the impact that it would bring about once it expanded in the down under
(Greenhalgh,2017). There was a considerable anticipation that Amazon would
bring a significant effect on the retail industry in Australia, where customer
electronics were thought to be especially vulnerable.

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    Another factor that led to the fall in the
value of JB HI-FI’s shares was the week consumer spending/sales that year. One
of the most significant contributors towards that was the shallow rise in wages
and then there were the Increased interest rates from banks which too contributed
in altering the consumer spending habits. Generally considering the global
events that occurred in 2017 also demotivated potential share investors from investing
into their company shares. Another factor that contributed to the decline in its
share prices were its industry downgrades. Many of the similar retailers
downgraded their customer support services last year. In other words, the
trading updates that they issued in 2017 were very poor which included multiple
cutbacks to save costs by negatively influencing their customer service standards,
price-beat sale policies. Such retailers were inclusive of RCG Corporation Ltd,
Oroton Group Limited, Myer Holdings Ltd and Reject Shop Ltd. Due to such
downgrades, many of the investors interpreted this as a signal of an ailing
industry (Newman, 2017).

   The share price of Harvey Norman Holdings
limited 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 is
franchised and has interests in property development like many other major corporations.
Some of its stores operate predominantly under a system of franchising
throughout Australia. In the overseas markets, the stores are wholly owned.
Such markets are inclusive of Malaysia and Singapore stores exclusively owned
by Harvey Norman. Moreover, The Rick Hart and Clive Peters brands are also
operated and owned by Harvey Norman (Russell, 2015). The latest ownership
structure is an essential factor to consider in Harvey Norman Holdings Limited
because it is a factor that affects the share price of a company. Harvey Norman
has an institutional ownership of 17.28% and in that case, the company has been
able to face some volatile movements in the share price when block trades are
executed by the institution in the open market. This is mainly when the amounts
of shares that are available are minimal. Such moves have been causing large
swings in the share prices. Another crucial group in the Harvey Norman Holdings
Ltd is the company insiders. Since this team is mainly concerned with the
management of the company its impact on the magnitude of the trading shares in
the market is minimal.

    One of the most prominent owners in this
company is the individual insiders who have a 37.15% stake. It has been
extensively asserted that ownership of this kind negatively affects the
companies that possess a low PE ratio. The public holds a stake of 27.34% in
the Harvey Norman Company. Such a size of ownership motivates the retail
investors since they have the collective power in making decisions on some of
the significant policy decisions for instance decisions on the director’s
appointments, executive compensation as well as acquisitions of businesses.
Such ownership levels equip the retail investors with the power to make some of
the initial policy decisions (Rowe, 2017). It, therefore, serves as a positive
sign for the investors who want to involve themselves in crucial decision
making in the company

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