Harvey Norman Sales Struggle 30% CE Deflation Has An Impact

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Harvey Norman has said that price deflation of consumer electronics goods of around 30% had impacted their margins despite “good” sales of IT and CE products. The group reported a decline in sales from like for like stores of 3.1%.
JB Hi Fi earlier this week reported a sales increase of over 8%. Global sales totalled $3.31 billion for the six months ended 31 December 2010.  When compared to global sales for the period 1 July 2009 to 31 December 2009, the increase was 1.3%.  Like for like sales for the six (6) months ended  31 December 2010 when compared to the same period ended 31 December 2009, decreased by  3.1%.
Harvey Norman said that global sales have been negatively affected by a 2.9% deterioration in the NZ$, a 16.1% deterioration in the Euro and a 11.8% deterioration in the UK Pound, for the six months ended 31 December 2010  compared to the six months ended 31 December 2009.

Directors said that Australian franchisee sales data for the first half year ended December 2011 indicated furniture and bedding franchisees continue to grow revenue and market share despite the industry experiencing a slow down with the dampened housing market. 

They said that electrical franchisees continue to strengthen their business in an extremely difficult environment.  The well documented price deflation for the half at around 30% has compromised revenue growth. 

They also said that manufacturers had indicated that this trend will continue during the calendar year 2011, although not at the levels of 2010.  Despite tough conditions, television market share has grown during the half.  This is due to the strong trading partnerships with key suppliers and continued focus on sectors within the television market Harvey reported.

 

 An unusually cool and wet summer has seen demand for air conditioners and other cooling products tumble significantly.  Despite the market decrease, electrical franchisees have again continued to increase their share of this segment. 

All other product categories showed good growth which led to increased market share in all segments, even after excluding the Clive Peeters and Rick Hart brands.
Computer franchisee sales during the half have been influenced by a very competitive market that was driven by a cautious consumer. This has also led to an increase in the price deflation in the key laptop computer category during the period.

Positive contributions from the digital SLR camera, smart phone and gaming console categories, combined with the expected growth in the tablet computer categories, have the franchisee well positioned to maximise the technology  product opportunities throughout 2011 they concluded.

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