This article is from the Australian Property Journal archive
THE impact of higher living costs on consumer spending has Harvey Norman expecting a hefty fall in full-year earnings.
It told shareholders yesterday it expected pre-tax profits, excluding the impact of property revaluations, to come in at 5% either side of $670 million, suggesting between $637 million and $704 million.
Last year’s pre-tax profit, excluding property valuations, was $943 million.
It said net property valuations for the 12 months ending 30th June will be about $119 million. The company owns the bulk of the freeholds of its own stores and had its property portfolio at $3.94 billion in its half-year results.
UBS offered a more bearish outlook of Harvey Norman last week as its analysts warned that the higher cost-of-living, elevated inflation and interest rate rises were catching up with low and middle-income earning Australians that investors should avoid “retailers that sell to middle Australia, or that have been the beneficiaries of a more exuberant consumer during COVID”.
It also warned against Solomon Lew’s retail empire Premier Investments, and Super Retail, the owner of Rebel, Supercheap Auto and BCF.
The consumer price index fell to 5.6% in May, Australian Bureau of Statistics data released yesterday showed, from 6.8% in April. That was a bigger change than the 6.1% the market was expecting, and the result eases concerns that the Reserve Bank will hike rates again at Tuesday’s board meeting.
