While the pandemic continues to wreak havoc on the Australian retail industry, online retailer Harris Technology (ASX: HT8) has maintained operational profitability while sustained online sales growth has drawn the attention of local importers keen to benefit from Harris Technology’s expanding eCommence network.
Based on the financial results reported by traditional retailers that are increasing their investment in online channels, it seems that pre-pandemic retail foot traffic will never return to historic levels. While that may be an issue for all those stores at your local shopping centre, it isn’t for Harris Technology which shut down all their retail shopfronts in 2018 before embarking on an ambitious strategy to become a pure play online tech retailer.
Having completed that turnaround strategy last year, Harris Technology has built on the momentum in FY22, reporting $22.8 million in sales revenue for the half year ended 31 December 2021. This represented a 45.7% increase on the previous corresponding period, while positioning the online retailer to comfortably eclipse the $41.8m generated across FY21.
Net profit after tax for the half year came in at $0.37 million which was down on the $1.0m reported this time last year, but that included an additional one-off expense tied to their major facility upgrade in November 2021.
As part of that upgrade, the Company used the move as an opportunity to clear ageing inventory, mostly at clearance prices, which had an impact on the bottom line.
“We continue to grow the company’s critical mass and maintain our eCommerce Tech market leading position whilst placing a focus on working capital management and stock turns,” said Harris Technology CEO, Garrison Huang.
Having cleared out a large amount of old stock, Harris Technology used the retail holiday season to trial a new range of household products which it listed across its marketplace channels that include Amazon, eBay, Catch, Kogan and more.
Given the intense competition in the tech products space as traditional retail redirects their advertising expenditure to their online stores, this horizontal expansion into household products offered an opportunity for Harris Technology to secure sales with higher margins.
“I am pleased to report that our trials of the Household Products were successful. This has paved the way to further diversify into a very wide range of new product categories through our online marketplaces such as Amazon and eBay etc,” said Huang.
“We are excited about this new profit opportunity in partnering with local importers and leveraging Harris Technology’s eCommerce infrastructure, and look forward to reporting further improvements on the expansion of these new categories where margins are healthier, in the second half of FY22 and beyond.”
The eCommerce infrastructure referenced by Huang is the Company’s ability to rapidly list products online across all its marketplace channels where it’s high ranking seller profiles ensure products are featured prominently and with higher ranking than new entrants.
Maintaining its ranking as the Number 1 seller on Amazon Australia with 100% positive reviews over the past six months.
Working with local importers keen to use Harris Technology’s infrastructure, the Company would add to their 2,500 active product listings, allowing both customers and Harris Technology to save on shipping costs by bundling.
Having recently added rapid antigen test kits to their portfolio with an uptick in sales will further add to the gross profits of the company.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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