Australian sales fall but profit up for retailer Harvey Norman

[SYDNEY] Australia's biggest electronics retailer Harvey Norman Holdings posted a rise in half-year profit on Thursday, as a fall in domestic sales was offset by increases offshore and property value gains.

Australia's retailers had their worst quarter in a year in the three months to December as a downturn in property prices left consumers saving more and spending less at shops, hurting stores from furniture-sellers to grocers.

Harvey Norman, said sales at its Australian franchise stores fell 1.7 per cent over the six months to Dec. 31 and were weaker still in the early part of the current half, suggesting there is more pain to come for ustomer-facing businesses.

Spending indicators are being closely watched by the country's central bank, which is on the lookout for any signs of a broader economic slowdown triggered by the property rout and has signalled it is open to cutting interest rates.

Still, half-year profit at Harvey Norman rose 7.3 per cent to A$222.8 million (S$214.5 million), helped higher by sharply rising contributions from stores in Singapore, Malaysia and Ireland, and a A$25.61 million boost from property revaluations.

"The headline result was up, but net of all the property gains ... it was actually flat and the trend is getting worse in Australia," said Alan Kwan, senior portfolio manager at fund manager Alleron Investment Management.

Shares in the company rose as much as 3.4 per cent to a six-month high in early trade, before falling to trade flat. The broader market fell 0.2 per cent.

The company also reported margins tightening as it discounted to boost sales. It declared a A$0.12 per share interim dividend, the same as last year.

The result contrasts with the company's biggest rival, JB Hi-Fi which defied the downturn to lift sales, beating market expectations.


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