Harvey Norman profit drops as sales retreat

Retailer Harvey Norman's says its full-year profit before tax is likely to be down almost 40 per cent on the previous 12 months.

The electrical and homewares retailer today announced that its global sales for the year ending June 30, 2012 were $5.74 billion, down 7 per cent from the previous year.

Harvey Norman shares were recently down as much as 2.5 cents, or 1.3 per cent, to 194.5 cents. The drop compared with a 1.3 per cent advance for the overall market.

The company said unaudited preliminary accounts for 2012 indicate profit before tax and minority interests of $227.6 million, down 39.1 per cent on the $373.9 million in 2011.

It said global like-for-like sales for 2012 were down 6.5 per cent on the previous year.

Australian like-for-like sales in the year to June 30 were down 7 per cent on the previous year.

Harvey Norman said it continued to be affected by tough trading conditions and deflation, particularly in its technology department.

However, home appliances, furniture and bedding remain stable and were well placed for any upturns in the housing market.

The company said global sales had been negatively affected by a six per cent deterioration in the Euro and a 4.7 per cent deterioration in the UK pound but benefited from a 1.7 per cent appreciation in the New Zealand dollar during the year.