Harvey Norman’s three reasons for slight sales increase

By Patrick Avenell

SYDNEY, NSW: Harvey Norman Holdings has today reported a slight increase in sales for the 2010 Financial Year. Sales in all franchised, commercial and other sales outlets in Australia, New Zealand, Slovenia and Ireland totalled $6.08 billion in the 12 months to 30 June 2010, up 0.8 per cent on the $6.03 billion recorded for FY09. These figures do not include sales in Singapore.

Harvey Norman chief financial officer Chris Mentis noted in his report to the Australian Securities Exchange that these results have been adversely affected by currency deterioration in New Zealand, the United Kingdom and Europe.

The Australian interests in the Harvey Norman group performed best of its national groupings, with a 2.2 per cent increase in total sales and a 2.3 per cent increase in life-for-like sales recorded during FY10. This figure includes two quarters of flat or negative sales, with the fourth quarter of this reporting period the most adverse: a 4 per cent drop in total sales.

Mentis said this decrease in the last quarter was caused by “a sharp decline in household disposable income and consumer sentiment”.

Furthermore, Mentis identified three key trends currently affecting Harvey Norman franchises:

-Furniture and bedding market share is increasing despite an industry “slowdown”.
-A “deflation in the flat panel market” has caused a softening of sales in the Electrical division.
-A cycling of the small business tax break and the stimulus package has weakened computer sales.

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