Harvey Norman continues discounting

Reported by AAP
Wednesday, February 29, 2012
Topics in this article:
Information Technology

Currency Converter

Mark BourisMyths bustedHome loans can seem a bit complicated and overwhelming. But it doesn't have to be. Mark Bouris clears up some common misconceptions.

Consumer goods retailer Harvey Norman will continue to heavily discount televisions and computers despite the damage it does to the company's bottom line.

Harvey Norman chairman Gerry Harvey said the company would weather the current retail storm and aimed to sell new electronic products after its competitors fell by the wayside.

"Probably eighty per cent of the product you've got as a gadget today, whether it's a television or a phone or a tablet or whatever, you won't have in five years' time. You'll have some other new product," Mr Harvey told AAP.

"We're the leaders in that market now but the problem we've got is that market has been really decimated and a lot of people are moving out of that market."

In an effort to diversify its product range, Harvey Norman has begun stocking motorbikes, sporting goods, boats, musical instruments, homewares and billiard tables.

Harvey Norman shares closed four per cent, or nine cents, lower at $2.07 on Wednesday after the company said like-for-like sales fell 6.3 per cent in the half in an uncertain retail environment.

The fall in the company's share price follows a 17 per cent rally in recent weeks.

Net profit was $128.95 million for the six months to December 31, down 2.1 per cent from $131.67 million in the prior corresponding period.

Mr Harvey said the retail sector had been marred by a combination of unprecedented challenges including competitive pressures and price deflation in product categories.

This had been accentuated by the high Australian dollar, deteriorating economic confidence and a prudent consumer.

Sales of televisions and computers would continue to be challenging in the six months ahead after price deflation resulted in lower sales dollars.

Mr Harvey said the company's new online site might never reach its goal of five per cent of total turnover in the next few years.

Asked whether he could see himself leading the company through tough trading conditions for the next few years, Mr Harvey said: "Will I be dead, or will they piss me off?

"I'll take it year by year, I don't know."

City Index analyst Peter Esho said Harvey Norman's underlying structural issues hadn't been resolved and gross profits had been affected by heavy discounting.

"Harvey Norman will continue to be at the mercy of a consumer that is conservative in their spending patterns and more receptive of shopping online," Mr Esho said.

Keep reading - next article
23/07/2014 23:58Sydney, Australia. 23 July,2014
advertisement