Harvey Norman NZ sales fall 4% as group profit plunges
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BUSINESSDESK: Harvey Norman's New Zealand sales fell 4% in the latest financial year as the wider group's profit plunges on tough trading conditions in its electrical goods categories.
The Sydney-based retailer reported a 7% decline in group sales at its franchise stores to $A5.74 billion in the year ended June 30, led by an 8.1% drop in Australian revenue and a 4% decline in New Zealand. On a like-for-like basis, sales fell 7% and 4.7%, respectively.
The sales figure doesn't include its Singapore outlets.
Annual pretax profit fell 39% to $A227.6 million, including a $A25 million writedown in the value of its property portfolio, the ASX-listed company says.
"Trading conditions continue to be challenged, coupled with deflationary headwinds, particularly in the technology categories. Home appliances, furniture and bedding remain stable and the businesses are well placed for any upturn in housing starts."
Harvey Norman's New Zealand first-half operating profit fell 0.4% to $A20.6 million as discounting of consumer electronics failed to revive spending appetite in the face of the Canterbury earthquakes and a weak labour market, the company reported in February.
The 1.7% annual appreciation in the New Zealand dollar had a positive impact on global sales, though a 6% deterioration in the euro and 4.7% fall in the pound offset those gains, the retailer says.
Harvey Norman's Slovenia and Croatia operations reported a 35% increase in annual sales, while its Irish stores boosted revenue 6.3% and its Northern Irish outlets 2%.
The shares fell 0.5% to $A1.96 on the ASX, and have gained 7.4% this year. The stock is rated an average "hold" based on 13 analysts' recommendations compiled by Reuters, with a median target price $A1.90.