By Patrick Avenell
Harvey Norman Holdings has today announced a profit decline of almost 25 per cent for the nine months to 31 March 2012, compared with the previous corresponding period. In an announcement to the Australian Securities Exchange, Harvey Norman revealed an unaudited profit of $204.8 million, down $67.5 million from the previous year.
Harvey Norman’s global sales figure during this period totalled $4.39 billion, down 6.7 per cent; while like-for-like sales were down 6.6 per cent.
This decline has been attributed to two core issues facing the retail consumer electronics industry: a disadvantageous currency exchange rate and a highly price-competitive marketplace; and the seasonal impact of low temperatures on air conditioners and cooling appliances.
Harvey Norman company secretary Chris Mentis noted in his report to the ASX that international sales have been negatively affected by a 5.9 per cent depreciation in the Euro and a 6.8 per cent drop in the Pound Sterling. Mentis further noted a slight improvement in the New Zealand Dollar, which has appreciated by 0.9 per cent.
In line with JB Hi-Fi’s explanation for contracted profits, Mentis said price erosion was a serious issue for the sector.
“AV/IT franchise sales continue to be challenged,” said Mentis. “Technology categories continue to be affected by a decline in average selling price. This is attributable to the high Australian dollar and intense competitor activity.”
The appliance categories have provided mixed results for Harvey Norman, with whitegoods performing well and the seasonal category disappointing.
“The seasonal category underperformed due to the well-documented weather conditions,” said Mentis. “Appliances and whitegoods continued to perform solidly with growth in the quarter. Harvey Norman’s strategic position on these categories resulted in significant growth above the market for the period.”
Despite a political campaign against Harvey Norman’s sourcing practices, Mentis reported that Furniture and Bedding sales have remained steady.