Harvey Norman profit plunges 32 per cent

31 Aug 2012, 5:29 pm   -   Source: AAP
Electrical and homewares retailer Harvey Norman's full year profit has plunged 32 per cent. (AAP)

Electrical and homewares retailer Harvey Norman's full year profit has plunged 32 per cent. (AAP)

Harvey Norman net profit falls 32 per cent but the retailer pins its hopes on picking up market share as its competitors are forced to shut

Beleaguered consumer goods retailer Harvey Norman hopes to claw back market share, as tough trading conditions are expected to force many of its competitors to close.

Harvey Norman chairman Gerry Harvey on Friday said the year to June 30 had been one of the retailer's most difficult, as the closure and restructure of some of its competitors led to big price falls.

"External factors, being the demise of WOW Sight & Sound, the closure of numerous Retravision stores and the restructure of the Dick Smith brand, created a glut of product being sold at never-before-seen prices," Mr Harvey said.

Harvey Norman on Friday reported a 32 per cent fall in full-year net profit to $172.5 million compared with the previous financial year, blaming price discounting and soft consumer sentiment for the weak result.

Mr Harvey said the 2011/12 financial year had been the company's most challenging due to unprecedented price and margin deflation in its television and devices categories.

He said he believed the company could increase market share in the technology sector over the next 12 months as many of its competitors were forced to close.

"Within the Australian franchising operations segment, we anticipate that the home entertainment and technology category will continue to remain volatile and uncertain," he said.

"However, with further retailer and supplier rationalisation occurring, there is the opportunity for improvement."

Mr Harvey said he was "cautiously optimistic" also about increasing market share in the geographic areas where it competed with other big chains.

He said the company was well placed to benefit when an upturn in consumer sentiment occurred.

There was also good growth in stores near mining areas in Western Australia, Queensland and the Hunter Valley of New South Wales .

Harvey Norman launched new online sites during 2012, and Mr Harvey said the growth of the company's online operations over the next 12 months would deliver increased revenue.

"Continuing refinement of our digital platform will create new opportunities for growth in which we continue to invest," he said.

DJC Corporate analyst Tim Montague-Jones said Harvey Norman's results were in line with expectations.

Mr Montague-Jones said that although he expected the retailer to pick up some market share, due to the demise of some competitors, it was difficult to know how much.

He said there was a structural shift in the retail industry, especially as more customers purchased online.

Although Harvey Norman had an internet site, it was still seen as a bricks-and-mortar retailer, Mr Montague-Jones said.

"I think a lot of consumers look at Harvey Norman as an old bricks-and-mortar brand and their preference might be to use alternative online websites," he said.

Harvey Norman shares closed five cents lower at $2.05.

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