Harvey Norman reports sluggish sales

Harvey Norman shares dropped 5.46 per cent yesterday. Photo / Hawkes Bay Today

SYDNEY: Furniture and electronics retailer Harvey Norman has reported slower than expected sales growth for the first quarter of 2009/10, prompting a slump in its share price.

Sales from its franchised complexes and other outlets in Australia, New Zealand, Slovenia and Ireland for the three months ended September rose 4.3 per cent to A$1.50 billion ($1.88 billion) from the previous corresponding quarter.

On a like-for-like store basis, sales were up 2 per cent.

The result was relatively flat when compared to the fourth quarter of 2008/09, when sales rose 4.5 per cent to A$1.49 billion and were up 2 per cent in like-for-like terms.

But given recent signs of the beginnings of a turnaround in the wider economy and sharp improvements in consumer confidence, financial market analysts had expected a better result.

Investment house JPMorgan had recently projected a 6.3 per cent rise in overall sales, and a 4.3 per cent lift in like-for-like sales, in the quarter.

Shares in Harvey Norman were down A26 cents, or 5.46 per cent, to A$4.50 yesterday.

Shares in fellow electronic goods retailer JB Hi-Fi were up A25c, or 1.22 per cent, to A$20.75.

However, Harvey Norman's September quarter figures still reflect a better rate of sales growth from the same quarter in 2008/09, when the global financial and economic crisis was setting in.

Then, first quarter sales were up 3 per cent to A$1.44 billion and up 1.3 per cent on a like-for-like basis.

Harvey Norman also said yesterday that its Australian sales had risen 5.8 per cent in the first quarter of this financial year from the same period a year earlier.

Like-for-like sales were also higher, by 4.6 per cent.

That compared to rises of 6.7 per cent and 5 per cent, respectively, in the June quarter.

- AAP