Harvey Norman Store Sales Down 10.2% PT Earnings Down 17.69%

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Gerry Harvey who last year went on national TV to highlight how bad service was in his stores, and then spent the rest of the year complaining about market conditions has today reported a 6.1% fall in sales and that pre tax earnings fell 17.69% to the end of December.

Pre-tax earnings went from $198.61 million to $163.47 million. The overall profit fall was 2.1%.

In comparison JB Hi Fi increased sales by 6.7% but had a 9% fall in profits to $79.6 million in the six months to the end of December. Harvey Norman said that in Australia, sales at Harvey Norman stores slipped 10.2 per cent during the second quarter of 2012 against the second quarter of 2011.

First half profits for Harvey Norman came in at $128.95 million for the six months to December.

The 6.1 per cent overall fall in sales to $3.11 billion was not broken out by category. Like-for-like sales for the first six months of 2011-12 fell by 6.3 per cent.

Last week we revealed via a leaked email that 24 Harvey Norman franchisees have been shifted to new locations as part of a major restructure, with many taking up their new jobs today. Some franchisees chose to resign.

Harvey Norman claims that the movement of 24 franchisee is not part of a major shakeup as claimed by staff who contacted ChannelNews.

Harvey Norman claims that a strengthening Australian dollar, deteriorating economic confidence and weak consumer sentiment was to blame for his downturn in profits and sales. Several consumers who have contacted SmartHouse claim that they are not shopping for consumer electronic goods in Harvey Norman stores because of poor service and a “boring” store environment.

Shares fell on the announcement, dropping 14 cents, or 6.5 per cent, to $2.02.

OptionsExpress market analyst Ben Le Brun told Fairfax Media that the fall in like-for-like sales was much more dramatic than the market was expecting.
”These sales figures are further evidence of the continued theme of the cautious or spend thrift consumer in Australia and throughout the world,” he said.

 

”To make matters worse for Harvey Norman, the caution or penny pinching seen in the retail sector seems to be focused  particularly in the white goods space.

“Computer games, DVDs even computers and plasma screen TVs are all seeing price deflation or can be acquired cheaply online.”

In Australia, sales at Harvey Norman slipped 10.2 per cent during the second quarter of 2012 against the second quarter of 2011.

Harvey Norman claimed that that their Australian furniture and bedding business recorded strong sales during the first half however there was no mention of the performance of the consumer electronics, electrical and IT categories.

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