Australia's Harvey Norman slumps on lower half-year profit (updated)

Harvey Norman Holdings

28/02/2023 24:37

(Adds details on dividend, share moves, analysts comments and
background)
       Feb 28 (Reuters) - Shares of Harvey Norman  HVN.AX 
slumped more than 10% on Tuesday after Australia's biggest
electronics retailer posted a 15% drop in its first-half profit
as the cost-of-living pressures crimped discretionary retail
spending. 
    Consumers continue to tighten their household budgets amid
rising borrowing costs and sky-high inflation, resulting in a
decline of sales across Harvey's key 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 soft with a lack of capital management.
    Shares of Harvey dropped up to 11.4% to hit their lowest
levels since July 1, 2022.
    Last month's sales momentum across Australia and New Zealand
franchisees slowed 10.2% and 8.1%, respectively, in local
currencies, the retailer said in a trading update.
        Higher interest rates drove up 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 programmes.
    The New South Wales-based retailer also slashed interim
dividend to 13 Australian cents per share from 20 cents last
year.
    The company reported profit after tax attributable for the
six-month period ended Dec. 31 of A$365.9 million, compared with
A$430.9 million last year.
     

    ($1 = 1.4835 Australian dollars)
    

 (Reporting by Savyata Mishra in Bengaluru; Editing by Sherry
Jacob-Phillips)
 ((Savyata.Mishra@thomsonreuters.com;))