(Reuters) -Shares of Harvey Norman slumped more than 10% on Tuesday after Australia’s biggest electronics retailer posted a 15% drop in its first-half profit as the cost-of-living pressures crimped discretionary retail spending.
Consumers continue to tighten their household budgets amid rising borrowing costs and sky-high inflation, resulting in a decline of sales across Harvey’s key divisions in Australia and New Zealand.
E&P Financial analyst Phillip Kimber said the overall result was likely well below consensus estimates while Jarden analysts said the result was soft with a lack of capital management.
Shares of Harvey dropped up to 11.4% to hit their lowest levels since July 1, 2022.
Last month’s sales momentum across Australia and New Zealand franchisees slowed 10.2% and 8.1%, respectively, in local currencies, the retailer said in a trading update.
Higher interest rates drove up finance costs during the reported half, Harvey said, while its other expenses rose 47% to A$58.4 million ($39.37 million) from spending on customer loyalty programmes.
The New South Wales-based retailer also slashed interim dividend to 13 Australian cents per share from 20 cents last year.
The company reported profit after tax attributable for the six-month period ended Dec. 31 of A$365.9 million, compared with A$430.9 million last year.
($1 = 1.4835 Australian dollars)
(Reporting by Savyata Mishra in Bengaluru; Editing by Sherry Jacob-Phillips)
