Harvey Norman profits down due to competition

Harvey Norman’s (ASX: HVN) gross profit has fallen 24.8%, reporting global sales totalling $4.4 billion for the nine months to March 31.

“Unaudited preliminary accounts for the period July 1, 2011 to March 31, 2012 indicate profit before tax and minority interests for the consolidated entity of $204.8 million, compared to $272.3 million for the corresponding prior period, a reduction of 24.8% ($67.5million),” the company said in a statement.

Like-for-like sales for the nine months ended March 31 this year decreased by 6.6%, when compared to the same period last year.

Harvey Norman Holdings says the strong Australian dollar and continued price deflation has eroded average selling profit and retail gross profit margin.

“Technology categories continue to be affected by a decline in average selling price. This is attributable to the high Australian dollar and intense competitor activity,” the company said in a statement.

“Appliances and whitegoods continued to perform solidly with growth in the quarter. Harvey Norman’s strategic position on these categories resulted in significant growth above the market for the period. Furniture and bedding franchisee sales remained steady during the period.”

The retailer’s shares were down 3.53%, to $1.99 at 12.11 pm AEST.