Harvey Norman profits drop as consumers tighten their belts

Harvey Norman has seen its profits fall 15 per cent as rising cost-of-living pressures hit consumer spending, but the company said it’s optimistic about weathering the challenging conditions.

The ASX-listed homewares and electronics retailer revealed a net profit of $365.9 million for the six months to December, a 15.1 per cent drop on the same time last year. Compared with the same period in 2020, before the pandemic started though, earnings are up by 71.3 per cent.

Harvey Norman chairman Gerry Harvey said that despite the challenging economic conditions, the company was focused on sustainable growth, and had continued with its strategies to improve the business during the half.

“Amid the macroeconomic headwinds of the past year, we have grown our integrated retail, franchise, property and digital business across eight countries to nearly $5 billion in system sales for the current half-year period,” he said in a statement filed with the ASX on Tuesday morning.

Retail analysts will be combing through the company’s numbers, with the performance of the electronics and furniture giant considered a strong indicator of consumer sentiment at a time when shoppers are expected to be more cautious about big ticket purchases.

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In a trading update for January, Harvey Norman revealed sales across Australian franchise stores had declined by 10.2 per cent compared to January 2022, while sales in New Zealand were down by 8.1 per cent.

“Despite the macroeconomic headwinds and cost of living pressures affecting discretionary retail, our strong balance sheet and our substantial growth in net assets throughout the pandemic has left us in a solid position to withstand these challenging circumstances,” the company said.

Harvey Norman declared an interim dividend of 13 cents per share, compared with 20 cents at the same time last year, payable on May 1.