Harvey Norman's mixed result
Furniture and electronics giant Harvey Norman has reported slower than expected sales growth for the first quarter of 2009/10, prompting a slump in its share price.
Reports in retail industry media quoted sales from its franchised complexes and other outlets in Australia, New Zealand, Slovenia and Ireland for the three months ended September rose 4.3 per cent to $1.50 billion from the previous corresponding quarter.
On a like-for-like store basis, sales were up two per cent.
The result was relatively flat when compared to the fourth quarter of 2008/09, when sales rose 4.5 per cent to $1.49 billion and were up two per cent in like-for-like terms.
But given recent signs of the beginnings of a turnaround in the wider economy and sharp improvements in consumer confidence, financial market analysts had expected a better result.
Investment house JPMorgan had recently projected a 6.3 per cent rise in overall sales, and a 4.3 per cent lift in like-for-like sales, in the quarter.
Shares in Harvey Norman were down 26 cents, or 5.46 per cent, to $4.50 at 1252 AEDT on Friday.
Shares in fellow electronic goods retailer JB Hi-Fi Ltd were up 25 cents, or 1.22 per cent, to $20.75.
However, Harvey Norman's September quarter figures still reflect a better rate of sales growth from the same quarter in 2008/09, when the global financial and economic crisis was setting in.
Then, first quarter sales were up three per cent to $1.44 billion and up 1.3 per cent on a like-for-like basis.
Harvey Norman also said that its Australian sales had risen 5.8 per cent in the first quarter of this financial year from the same period a year earlier.
Like-for-like sales were also higher, by 4.6 per cent.
That compared to rises of 6.7 per cent and five per cent, respectively in the June quarter.
In 2008/09, Harvey Norman generated annual sales of $6.03 billion, up 3.8 per cent on the previous year, and reported a 1.4 per cent rise in like-for-like sales.
It made a net profit of $214.35 million for the year, down 40.2 per cent. Excluding proceeds from the sale of an asset, its underlying net profit fell 15.2 per cent to $250.42 million.
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Mark Wilson
It is interesting to read the results from Harvey Norman and see how they reflect against my own situation. I have a medium size piture framing businessin Ballina NSW (operating 19 years) and have seen a 23% decline in sales in this second half of the Year (from July) compared with the same time last year. I have been discussing my trading figures with fellow retailers in my area and have discovered a similar occurance with them. I know of quite a few people in the building trade and sentiment from them is mixed. Some are very busy whilst others are finding the work steady or sparse. Everyone I speak to is very concerned over the threat of interest rate rises and how they will reflect consumer confidence and we are concerned that the government is paying to much attention to the finacial results of new home buyers which has seen unrealist growth due to the stimulus package and has not given enough focus to other sectors such as retail and manufacturing.