The business flagged that difficult economic conditions were affecting consumers,while a cooler summer “led to a substantial decrease in the sales of seasonal products by electrical and furniture franchisees such as airconditioning units,fans,air treatment units,outdoor furniture and barbeques” during the six months to December.
A trading update for January also revealed that Australian store sales had fallen 10 per cent compared with the same time last year,showing that consumers are finally starting to reduce discretionary spending.
Loading
Fellow ASX-listed homegoods retailer JB Hi-Fi also reported this month that sales momentum was slowing after a bumper few years fuelled by the pandemic.
Harvey Norman shares sunk as investors digested the numbers,dropping by as much as 12.7 per cent to a low of $3.63 during Tuesday’s session.
Retail analysts were watching the company’s numbers closely,with the performance of the electronics and furniture giant considered a strong indicator of consumer sentiment for big ticket purchases. Harvey Norman’s half-year numbers have come in softer than what the market had been expecting.
“The weaker sales trends signal the start of a slowdown in sales,and when combined with elevated inventory creates a meaningful risk to earnings,depending on discounting activity,” MST Marquee analyst Craig Woolford said.