Drastic upturn needed to see profits, says Harvey Norman
Published 28/08/2010 | 05:00
AUSTRALIAN retailer Harvey Norman has said it would have to see a "drastic" improvement in macroeconomic conditions in Ireland before its electrical and furniture outlets here can generate a profit.
The warning came as the company, which has 14 outlets in the republic and two in Northern Ireland and employs about 800 people on the island, racked up trading losses of A$42.6m (€26.5m) in the 12 months to the end of June.
That compounded a A$49.3m (€28.3m at the time) loss the company's Irish arm recorded in the previous financial year.
Its pre-tax loss in Ireland in the last financial year was A$50.4m (€34.7m), compared to A$76.6m loss (€44m at the time) in the 2009 fiscal period.
Despite the mounting losses, the retailer reiterated that it remains committed to its Irish business for the long term.
"It seems that the Irish economy has bottomed out and we are seeing the first green shoots of recovery. If that recovery is sustained, we will be able to invest in more stores and create more jobs," said Gerry Harvey, who is executive chairman of the Australian group. He added that the group "has the cash reserves" to continue supporting the Irish business.
Blaine Callard, who heads the Irish division, said the past financial year had been "challenging" but that the company had held market share.
"We had a very strong year for consumer electronics, with double-digit growth in our technology business," he added.
Overall sales at Harvey Norman in Ireland remained relatively flat, climbing just 1.4pc to €127.2m in the 12 months to the end of June.
In the prior financial year, Harvey Norman's Irish unit had posted a sharp decline in sales in the Republic of Ireland, when it slumped over 8pc in euro terms. "In such a flat trading environment, we can focus inwards and get the basics right, so we emerge fitter and better when customers start shopping again," maintained Mr Callard.
In its statement yesterday, Harvey Norman noted that when its sales from the Republic of Ireland were converted into Australian dollars, sales revenue for the purpose of its annual statement actually fell by 13.5pc due to a near 15pc decline in the euro versus the Australian dollar during the period.
Overall, full-year net profit at the Harvey Norman group rose 8pc to A$231.4m (€159.6m).