Harvey Norman sales crumble, profits tumble

By Claire Reilly

Harvey Norman announced its half-yearly sales and profit results yesterday, with the electrical retailer announcing a collapse in profits of almost 40 per cent.

Total global sales for the six months ended 31 December 2012 (excluding Singapore) were down 7.3 per cent on the previous year, while global like-for-like sales fell 5.3 per cent.

Australia’s performance was worse than the global average, with total sales for the half-year down 8.6 per cent (Q1 down 11.5 per cent year-on-year, Q2 down 5.8 per cent), while like-for-like sales for the six months fell 6.3 per cent, once again driven by poor results in Q1.

One of the only positive notes highlighted by Harveys was an increase in January sales of 4.1 per cent.

When it came to profits, the story was much worse for the retailer. Profits before tax plummeted over the six months, falling from $163.47 million in 2H 2012 down to $99.55 million in 2H 2013 — a decline of 39.1 per cent.

Speaking about Harvey Norman’s results, chairman Gerry Harvey said the company’s franchisees had endured a tough six months but conditions looked set to improve.

“Conditions in Australia and the global markets in which we operate remain tough,” he said in a statement yesterday. “The aggressive discounting experienced in the second half of 2012 has stabilised and pleasingly we are seeing an uptick in sales.

“Interest rates are at historical lows which should start moving the consumer back into the buying cycle from the savings cycle. Harvey Norman will be the beneficiary of this, given the diverse homemaker categories Harvey Norman franchisees operate in.”

He also noted that the company’s property portfolio continued to be one of the strong points of the business.

“We have a property portfolio valued at $2.14 billion which provides strength and stability to our balance sheet,” he said in a statement. “The property portfolio is a critical element in the Harvey Norman integrated retail, franchising and property system, and a source of competitive advantage.”

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