© Reuters. Shoppers walk through the furniture showroom at a Harvey Norman store in Sydney, Australia, February 27, 2017. REUTERS/Jason Reed
(Reuters) – Harvey Norman shares tumbled more than 10% on Tuesday after Australia’s largest electronics retailer posted a 15% drop in first-half profit as cost pressures from life restricted discretionary retail spending.
Consumers continue to tighten their household budgets amid rising borrowing costs and skyrocketing inflation, resulting in declining sales at key Harvey divisions in Australia and New Zealand.
E&P financial analyst Phillip Kimber said the overall result was likely well below consensus estimates, while Jarden analysts said the result was weak due to a lack of capital management.
Harvey shares fell as much as 11.4% to hit their lowest levels since July 1, 2022.
Sales momentum last month at Australian and New Zealand franchises slowed to 10.2% and 8.1%, respectively, in local currencies, the retailer said in a business update.
Higher interest rates boosted finance costs during the reported half, Harvey said, while its other expenses rose 47% to A$58.4 million ($39.37 million) from spending on customer loyalty programs. customers.
The New South Wales-based retailer also cut the interim dividend to 13 Australian pence per share from 20 pence last year.
The company reported attributable profit after tax for the six-month period ended December 31 of A$365.9 million, compared to A$430.9 million last year.
($1 = 1.4835 Australian dollars)
