Harvey Norman has reported a big drop in its full-year profit, to just over $214 million, compared to earnings of $358.4 million dollars last year.
The 40 per cent decline in profit was largely a result of smaller retail margins as companies discounted to maintain sales.
Harvey Norman's sales increased 3.8 per cent over the year, although the rise was mostly driven by increasing sales at the company's 195 franchise outlets.
Harvey Norman's 69 company-owned stores recorded a much more modest 0.8 per cent rise in sales.
The large decline in profit came as little surprise to analysts, with the average prediction being for a $213 million result.
Harvey Norman releases regular sales updates throughout the year, and had repeatedly warned that margins were under strong downward pressure because of the economic downturn.
The retailer says it is cautiously optimistic about the future, after the challenging conditions it has faced during the past 12 months.
It says the second half of the financial year was much stronger than the first, partly due to the "positive impact of the government stimulus package."
The company says sales have increased 5.7 per cent during the period between July 1 and August 27 compared to the same period a year earlier for stores that have been open at least a year. It says this beat internal expectations.
The company's chairman Gerry Harvey says confidence is on the way up, with consumers buoyed by Australia avoiding a technical recession.
"Consumer sentiment has obviously increased an awful lot, and our figures are showing the result of that consumer sentiment, so it does look as if the worst of all of this has passed and we're now in the growth phase," he said.
The company will issue a final dividend of 6 cents per share, bring the total for the 2009 financial year to 11 cents, which is the same payout as in the 2007 financial year and down on last year's 14 cent dividend.
The company's shares surged 10 per cent after the earnings report came out, and were 7.8 per cent higher at $3.45 at about 11:30am (AEST).
http://www.abc.net.au/news/stories/2009/08/28/2669698.htm
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