Harvey Norman expects FY23 profit before tax to be within the range of $637 million and $704 million for the year ending 30 June, 2023. This compares with profit before tax of $943 million in the previous year, reflecting a softening market as cost-of-living and inflation puts pressure on consumers.
The market disclosure statement issued by the retailer did not provide any further detail with its full financial results due to be released on 31 August 2023.
Equities research platform, MST Marquee issued an analysis presentation to its investors, suggesting that the majority of the weakness is company specific challenges, namely elevated inventory and loss of market share.
“Given the weak 2H23, earnings are also likely to be very weak in 1H24 and margins should trough in FY24,” the MST Marquee analysis read.
“Investors have been nervous about elevated profit margins for many retailers and Harvey Norman is now on track to be well below FY19 levels… One of the main concerns with retailers like Harvey Norman is the elevated profit margins during Covid and the speed and magnitude of the unwind in margins… the weaker margins in Australia may start to recover in 2H24 depending on the consumer demand backdrop and quality and size of its inventory position.”