Without holidays to throw our discretionary spending at, Aussies are online shopping in droves as evidenced by the sustained revenue growth reported by Harris Technology (ASX: HT8). But for investors, it could just be the start of something even bigger with Black Friday, Cyber Monday, Christmas and Boxing Day right around the corner.
Since the onset of the pandemic, there’s been very little for Australians to do beyond online shopping. This resulted in tech retailer Harris Technology posting a new sales record, generating $15.1 million for the September quarter which represented a 54% increase on the previous corresponding quarter.
Without carrying the costs of retail shopfronts, Harris Technology benefits greatly from the millions of dollars that online marketplaces like Amazon, eBay, Catch and Kogan spend on advertising, driving online traffic towards Harris Technology’s products. It’s why sales across all the aforementioned platforms were up for Harris which also boasts the title of Number 1 seller on Amazon.
“Harris Technology has continued to build on the momentum of 206% FY21 revenue increase on the prior year. FY21 was a year that saw 82% of Australian households participate in online shopping,” said Harris Technology CEO, Garrison Huang,
“This has Harris Technology ideally positioned to capitalise on online shopping trends in the upcoming busy holiday season.”
It could be a very busy few months indeed for the online retailer which is likely to cash in big this November with major retail promotions of Black Friday and Cyber Monday which will then be followed by traditional Christmas and Boxing Day spending.
While revenue has continued to rise, some retailers have been hamstrung by international shipping delays that have restricted import deliveries, making it hard for retailers to secure inventory. This has not been the case for Harris however, with the Company increasing their inventory on hand from $10.8 million in June to carry $12.6m of inventory at the end of September, an 18% increase in line with the increase in sales.
Impressively, this increased inventory has been funded by free cash flow with Harris also reporting $502k of net positive operating cash flow for the quarter. It continues the momentum delivered in FY21 when Harris Technology posted $1.75m net profit after tax making it one of the undervalued ASX-listed retailers posting strong profits while trading at a revenue multiplier of less than 1.0.
With $3.5m cash on hand, the Company has flagged plans for further investment in its inventory as turnover grows thereby delivering increasing profits, including a move to expand into private label, thereby improving the mix of margin generating products.
Given Amazon is widely known as the premier marketplace for Black Friday and Cyber Monday, it’s going to be a busy month ahead for Harris Technology as the Number 1 ranked seller on the Australian platform.
In 2020, independent sellers on Amazon generated more than USD $4.8 billion in worldwide sales from Black Friday through Cyber Monday, a 60% increase on 2019.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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[…] By securing more inventory, the Company has been turning it over faster than ever which resulted in a new sales record for the September Quarter when generating $15.1 million in sales, a 54% increase on the previous […]
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