Harris Technology Group Limited reported $3.6 million in sales and a positive operating cash flow in Q2 FY25, driven by strong performance in refurbished technology products as the company adjusts its inventory strategy.
- Q2 FY25 sales reached $3.6 million
- Net positive operating cash flow of $183,000
- Inventory increased slightly to $3.6 million with $2.8 million purchased in the quarter
- Strategic pivot towards refurbished tech category
- Cash on hand of $1.1 million and $5.9 million undrawn financing facility
Quarterly Performance Overview
Harris Technology Group Limited (ASX: HT8) has released its activity report for the December 2024 quarter, revealing a solid performance despite ongoing challenges in the retail sector. The company recorded sales of $3.6 million and generated a net positive operating cash flow of $183,000, capitalising on the holiday season's demand for high-margin seasonal products.
The results underscore Harris Technology's resilience and adaptability in a competitive eCommerce landscape, particularly as it continues to transition away from traditional household products towards more profitable categories.
Strategic Shift to Refurbished Technology
A key highlight from the quarter is the sustained growth in Harris Technology's refurbished tech division, which marked its first full year of operation. This segment has consistently delivered better margins, bucking broader retail trends and providing a promising avenue for future growth.
CEO Garrison Huang emphasised the transformational nature of 2024 for the company, noting the strategic pivot to focus resources on refurbished technology products. This move comes as the company plans to downscale its inventory of cyclical household items, which have performed well historically but are less predictable due to seasonal fluctuations.
Harris Technology will maintain a curated selection of non-tech products on its owned channels and major online marketplaces such as Amazon, Kogan, Catch, and eBay, ensuring a diversified but focused product offering.
Inventory and Financial Position
Inventory levels rose slightly to $3.6 million by the end of December, including $2.8 million of new purchases during the quarter. This inventory management reflects the company’s intent to balance supply with demand, particularly in its growing refurbished tech category.
Financially, Harris Technology remains well-positioned with $1.1 million in cash on hand and an undrawn financing facility of $5.9 million, providing ample liquidity to support ongoing operations and strategic initiatives.
Outlook and Market Positioning
Despite persistent difficult trading conditions in the retail sector, Harris Technology’s leadership is optimistic about scaling the refurbished tech business further in 2025. The company’s focus on niche product lines within its Manufacturer to Consumer (M2C) business also aims to enhance sales performance and profitability.
With a 30-plus year heritage and a fully online business model, Harris Technology is leveraging its brand recognition and eCommerce expertise to navigate market headwinds and capitalize on emerging consumer trends.
Bottom Line?
Harris Technology’s strategic pivot to refurbished tech sets the stage for growth, but inventory management and market conditions will be critical to watch.
Questions in the middle?
- How will Harris Technology scale its refurbished tech segment amid evolving consumer preferences?
- What impact will the downscaling of household product inventory have on overall sales and margins?
- Will the company consider tapping into its undrawn financing facility to accelerate growth initiatives?