Profit down 19% to $208 million

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FURNITURE and electronics retailer Harvey Norman’s half-year net profit has slumped as the group’s dairy investments soured and franchisees’ earnings fell.

Harvey Norman shares have plunged, falling 14 per cent to $3.94, their lowest level since November, by 11:20am AEDT.

The retailer’s net profit of $207.7 million for the six months to December 31 is down 19.3 per cent on the same period a year ago, with a $20.7 million before-tax impairment hit from its dairy investment, the Coomboona Holdings joint venture, weighing on the group’s bottom line.

“We’re very much focused on raising the bar of our retail experience, and this period has seen a concerted focus towards completing our flagship store strategy by the end of the financial year,” Harvey Norman chairman Gerry Harvey said in a statement.

Harvey Norman’s result also included a $4.57 million before-tax trading loss by the Coomboona JV. Excluding these hits and net property revaluations, underlying profit is down 1.4 per cent at $209.4 million.

The group’s Australian franchisee stores profit has fallen 2.9 per cent to $167.2 million amid stiff competition and higher staff wages due to an additional weekend trading day compared to a year ago, the company says.

Company-operated store sales revenue is up 4.7 per cent at $1.02 billion while franchise sales have lifted 4.8 per cent to $3 billion. The company has cut its interim dividend by two cents to 12 cents a share, fully franked.

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