HARVEYNORMAN AND JB HIFI CHANGES IN SHARE PRICES JBHi-Fi Limited’s shareholders have faced a rough year so far because the shareprice of the company has lost close to 22% in value during 2017 and the sharesfetched less than $ 22.
This is still not as dwindling as compared to the highshare prices of $ 31.21 in 52 weeks. Some of the factors that led to thedecline in the value of shares may be inclusive of Amazon.com. The E-commercein behemoth did not even reach the shores of Australia, but the investors wereworried about the impact that it would bring about once it expanded down under(Greenhalgh,2017).
There was considerable anticipation that Amazon would bringa significant effect on the retail industry in Australia, where customerelectronics were thought to be especially vulnerable. The share price ofHarvey Norman Holdings limited also fell close to 30% in 2017.Another factorthat led to the fall in the value of shares in JB is weak spending.
One of themost significant contributors towards weak consumer spending is the low growthof wages. Increased interest rates from banks also contribute to weak consumerspending. Through looking at the global events that occurred in 2017 many ofthe investors bought little shares from the company. Another factor thatcontributed to the decline in share price in the business is downgrades. Manyof similar retailers downgraded their guidance in 2017.In other words, thetrading updates that they issued in 2017 were very poor. Such retailers wereinclusive of RCG Corporation Ltd, Oroton Group Limited, Myer Holdings Ltd andReject Shop Ltd.
Due to such downgrades, many of the investors interpreted thisas a signal of an ailing industry (Newman, 2017). Harvey NormanHoldings Limited is a retail business which is franchised and also possessessome property development interests. Some of its stores operate predominantlyunder a system of franchising throughout Australia. In the overseas markets,the stores are wholly owned. Such markets are inclusive of Malaysia andSingapore stores owned by Harvey Norman. 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 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 mostprominent owners in this company is the individual insiders who have a 37.
15%stake. It has been extensively asserted that ownership of this kind negativelyaffects the companies that possess a low PE ratio. The public holds a stake of27.34% in the Harvey Norman Company. Such a size of ownership motivates theretail investors since they have the collective power in making decisions onsome of the significant policy decisions for instance decisions on thedirector’s appointments, executive compensation as well as acquisitions ofbusinesses. Such ownership levels equip the retail investors with the power tomake some of the initial policy decisions (Rowe, 2017).
It, therefore, servesas a positive sign for the investors who want to involve themselves in crucialdecision making in the company.