Australia’s leading furniture and electronics retailer Harvey Norman has posted disappointing results after enjoying a COVID induced sales boom.
The company suffered a 36 per cent nosedive in profits in the four months to the end of October. Worse yet, the chain led by Gerry Harvey (featured image) told anxious investors that total sales revenue from July 1 to November 21 fell 8.8 per cent compared to the same period last year.
The pain continued as profit before tax and non-controlling interests shot down 35.5 percent to $217.4 million in the quarter. After the unfavorable results, Harvey Norman made the peculiar decision to not provide any earnings forecasts for the rest of the year.
A company spokesperson put this decision down to “great uncertainty about the future economy.”
As reported on by the Sydney Morning Herald, previously Harvey Norman had been one of the best performing retailers during the pandemic. They benefited from the mass purchasing of home-related products, home office supplies and a roaring housing market. Underpinned by stay-at-home measures, consumer electronics also experienced greater demand.
Earlier this year the company posted a shocking 78.8 per cent jump in full-year earnings to $1.18 billion. This outcome was so good that even Mr Harvey was shocked by the performance. This is an especially impressive feat so soon after he described June 30, 2020, trading results as, “the best result we have put out in our life.”
Interestingly at this 2020 end of financial year event, Mr Harvey also correctly foreshadowed tough challenges ahead. He said, “we never know what they are, but things are a little more clouded that in the past.”
He added “A lot of people are making predictions about whether it will be a hard of soft landing or whatever, but no one really knows.”
This statement may go some ways to explaining why Harvey Norman has chosen not to provide any earnings forecasts for the rest of year.
Although it would appear Harvey Norman’s sales revenue has stabilized, when compared to a Covid-free 2019 financial year earnings are still 70 per cent up and sales have achieved a stellar 16.9 per cent growth.
Positively Citigroup has signalled confidence in the ongoing performance of retailers like Harvey Norman who have substantial home-related product offerings. Stock analysts have also predicted attractive future valuations.
