Harvey Norman has suffered a 31 percent drop in net profit for fiscal 2012, a result CEO Gerry Harvey blamed on bargain-basement prices offered by rivals shutting down their operations.
The retailer posted $172.5 million net profit for the full year to June 30, compared to $252.3 million in 2011.
Pre-tax earnings were also down, dropping 24.8 percent to $301.9 million from $401.5 million in 2011, as were overall sales, falling 9.6 percent to $1.4 billion.
Harvey said the liquidation of electronics chain WOW Sight and Sound, as well as the restructure of Dick Smith and closure of numerous Retravision stores had created a “glut of products” being sold at “never-before-seen” prices.
The company said in a statement “unprecedented price and margin deflation” in the TV and technology categories had severely impacted sales.
The company expected the categories to remain volatile but said there was an opportunity for improvement given further ongoing rationalisation in the retail sector.
In July, Harvey Norman revealed plans to purchase several Retravision stores in a move which would eliminate a sizable chunk of its competition.
Not even a year after reporting a $41.07 million loss from its purchase of Clive Peeters and Rick Hart, the retailer will take over Retravision and Betta Electrical stores in Gunnedah, New South Wales, as well another six unnamed locations.
The Southern arm of the Retravision group went into administration in May this year. The administration does not affect Retravision’s Western and Northern arms, the latter of which includes the Gunnedah store.
The plan will see Harvey Norman introduce new retail categories including cookware and appliances.
A busy year
Harvey Norman is on track to open its superstore in Queensland’s Maroochydore in November 2012, the company told investors today.
Harvey Norman has spent the past year battling through falling retail sales, a changing marketplace, a new online strategy, store closures and even fires, but is continuing to invest in major projects, including the 32,600 sqm Maroochydore homemaker centre.
The mega-centre will consist of Joyce Mayne, Domayne, Harvey Norman and other non-related retail outlets. The retailer is also mulling new store opportunities all around Australia, including Canberra and Sydney.