By Patrick Avenell

Despite today’s announcement of a 24.8 per cent decline in profits from the nine months to 31 March 2012, Harvey Norman company secretary Chris Mentis said the group’s franchisees were in a good position to capitalise on any upturn in the market.

“While the unaudited profit results clearly show the impact of the aggressive competitive activity in the AV/IT sector, Harvey Norman franchisees are well placed to take advantage of the consolidation in the market,” Mentis said.

This consolidation includes the market share freed up by the collapse of WOW! Sight & Sound in Queensland and several regional areas, and the restructuring of the Dick Smith network.

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“The franchisees have worked hard to maintain market share, however, this has resulted in an increase in franchisee tactical support.

“In addition, the strength of the Australian Dollar and continued price deflation has eroded average selling prices and, ultimately, retail gross profit margin.”

‘Franchisee tactical support’ refers to a mix of measures undertaken by Harvey Norman Holdings to ease some of its proprietors’ burdens. Examples include a reduction in rental costs for centrally owned stores, a reduction in franchisee fees and increased catalogue and advertising support.