This morning retail distributor Harvey Norman Holdings Ltd [ASX:HVN] dropped by a staggering 13.97%. It ended the day down 14.63%.
Founded in 1982 with a market cap of $4.88 billion, Harvey Norman’s products consist of electrical goods, furniture and computers, as well as bedding and kitchen appliances.
Harvey Norman have 194 franchised complexes and 87 company stores around the world, and an enterprise value of $5.71 billion.
Their net profit after taxes fell 19% to about $208 million. Share earnings dropped by 19 cents a share to 18,65 cents.
What was the cause for this sudden decrease?
Harvey Norman experienced weak results, they went through losses in joint ventures and ended up with a negative property revaluation.
This time last year, Harvey Normans properties gained $74 million. For this year they only gained $53 million which was the cause for low profits.
Harvey Norman also suffered losses from its Coomboona Joint Venture, a dairy farm that they had invested in.
The Joint Venture lost $4.5 million due to operating costs.
Executive Chairman Gerry Harvey believes these results aren’t all bad as he stated:
‘This is a really solid result when you consider the previous half-year period saw the strongest results on record and it shows our franchisees have kept up that momentum to deliver an unprecedented result.’
What’s next for Harvey Norman?
Two new stores are planned to open in West Australia and Malaysia within the year’s second half.
They have an outlook to continue to invest in flagship stores located in Zagreb, Auburn and Wairau Park.
A dispute has occurred between Harvey Norman and their Coomboona joint venture, which prompted Harvey Normal to write the investment off.
Recently, Harvey Norman demanded a $18,51 million repayment from its joint venture.
Editor, Money Morning
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