Harvey Norman’s Irish sorrow continues

By Patrick Avenell

SYDNEY, NSW: Harvey Norman has today reported mixed results for its oversees controlled entities. Slovenia has done very well and New Zealand and Asia are stable, but the Irish experiment continues to haemorrhage money.

To start with the good news, profits from Harvey Norman’s Slovenia stores have risen almost 30 per cent, to $3.12 million for the year ending 30 June 2009. Harvey Norman reported that this was due to two key factors: the appreciation in the currency rates and the strong brand recognition in the Slovenian marketplace.

In New Zealand, the recession and the devaluation of the New Zealand dollar has resulted in a $44 million profit, down $8 million from the last year. Market share has grown, however, though Harveys report this has been at the expense of margins.

In Asia, Harvey Norman’s brand recognition and market share have strengthened, especially in Malaysia. The combined result for the Malaysia and Singapore stores is $8.4 million, down slightly from last year’s result of $10.2 million. This result has been negatively impacted by the closure of the export and distribution business in this region.

These moderate results, however, are overshadowed by Harvey Norman’s performance in the Irish and Northern Irish markets. The group has reported a trading loss of $49.33 million. This loss was in part due to the start up costs associated with planting the business in Northern Ireland, which is list as $7.6 million. In its report to the ASX, Harvey Norman wrote that the appreciation of the Euro and the Pound Sterling has heightened this loss.

This disappointing result is not limited to Harvey Norman, reported the company, who told the ASX that retail overall is down in the Emerald Isle.

“The economic situation in Ireland has continued to deteriorate during the year ended 30 June 2009 and the severe recession has impacted all Irish retailers,” wrote Harvey Norman.

“The Board is committed to Ireland and has established strong roots in the Irish market. The Harvey Norman brand is now well-known in Ireland and is respected by both suppliers and customers.”

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