Slump in Profits Misleading: Harvey Norman CEO
Harvey Norman's CEO defended a slump in the global retailer's profits on Thursday, saying the numbers were "misleading" and the company was set for improved sales in 2013.
The Australian company, which has stores worldwide, reported that profit fell 36 percent to A$81.9 million ($84.12 million) in the six months to December 31, 2012 from A$132.50 million on weaker sales and the devaluation of the company's properties in Australia. The value of its Australian stores depreciated by A$31.5 million in the second half of last year.
"The problem is that it's a little misleading because our property has been devalued a little bit. But our sales, for the first time, are looking a little bit positive...we're now seeing growth and we haven't seen that for a long time," said Gerry Harvey, executive chairman at Harvey Norman.
Over the second half of 2012, total sales fell by 7.3 percent, but Harvey was optimistic about 2013.
"January sales are out and are looking okay, and February is looking okay. We're reasonably confident, we're optimistic that it will continue till the end of June and beyond," he said.
The CEO said the losses in his firm's property value would be recouped as Australia's property market gathered pace. Australia cut the cost of fixed-rate mortgages earlier in the month to their lowest in two decades to try and revive the country's flagging property market.
"Property prices have only one place to go and that's up. So you can go and buy a property now in Australia, a really good property, and get an 8 to 9 percent yield from it. That's an enormous yield if you got interest rates at only 3, 4 or 5 percent. So it's just a matter of time," he said.
Harvey flagged difficulties in Europe, where he said he was "putting the brakes on," highlighting Ireland, Slovenia and Croatia as weak spots. The strongest regions for growth for Harvey Norman, that sells electronics, computers, furniture and bedding included Singapore, Malaysia, Australia and New Zealand.
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