Harvey Norman NZ sales recover

23:12, Aug 14 2013

Sales at Harvey Norman in New Zealand rose 2.9 per cent for the half-year, thanks to the reopening of a Christchurch store and increasing consumer confidence.

The New Zealand result points to a second-quarter recovery after sales slipped 1.3 per cent in the first quarter.

It was a highlight in the retailer's half-year report, with sales in its biggest market - Australia - down 8.6 per cent year-on-year.

The electronics and home goods retailer's total net profit after tax fell 36.5 per cent to A$81.9 million ($101.2 million), largely due to property revaluation. Excluding that revaluation, net profit fell 6.2 per cent to A$113.4m.

Same-store sales in New Zealand increased 2.3 per cent.

The ASX-listed retailer said its New Zealand operations remained strong thanks to improving consumer confidence and the re-opening of its main complex in Christchurch, which had been damaged in the earthquakes, and boosted its half-year sales by A$10.1m.

The company said conditions in all its markets remained tough but there was cause for optimism.

"The aggressive discounting experienced in the second half of 2012 has stabilised and pleasingly we are seeing an uptick in sales," it said.

The retailer said global sales in January rose 3.8 per cent on January last year, with same-store sales up 5.4 per cent.

Low interest rates should move consumers out of saving and into buying mode, the company said.

"Harvey Norman will be a beneficiary of this, given the diverse homemaker categories Harvey Norman franchisees operate in."

But it said the audio-visual - including flat-screen televisions - and information technology categories continued to be challenged by deflation squeezing average retail prices and margins.

Founder and executive chairman Gerry Harvey said in the retailer's annual report in November that its "homemaker" categories in New Zealand were doing well - thanks in part to the closure of some bed suppliers.

Plunging prices for consumer electronics such as flat-screen TVs took a toll on the New Zealand business' annual profit last year, which slumped 27 per cent to $16 million.