Harvey Norman Share Price Slide as Sales Revenue Drops (ASX:HVN)

Popular retailer Harvey Norman Holdings Ltd [ASX:HVN] is enduring a tough day of trading today.

At time of writing, the HVN share price is down 1.45%. Dipping into the red as investors process a recent trading update, which showed weaker sales figures for the business in FY22 to date.

However, the share price has actually rebounded somewhat from the open of trading. When trading first began this morning, HVN shares dipped to as low as $4.98 per share: representing a 3.67% decline from yesterday’s close.

So while the stock is still in the red, it has recouped some of its earlier losses.

Let’s take a closer look at the aforementioned sales figures, though, to see why…

Poor start to FY22 hasn’t detracted from a bumper pandemic period

As mentioned, the key reason for today’s sell-off is due to a decline in revenue. More specifically, an 8.8% decrease in aggregated sales revenue from 1 July to 21 November, relative to the same period in 2020.

In other words, HVN hasn’t quite gotten off to as great a start this financial year as it did last year. A scenario that management itself has partially blamed on currency fluctuations: namely depreciation in the euro, Singaporean dollar, and the ringgit.

Granted, a wide array of store closures across Australia and New Zealand also hasn’t helped. Thankfully, though, many of the stores have helped offset these challenging retail conditions with a growing online presence.

More importantly, though, as HVN made sure to point out, aggregated sales revenue is still well above pre-pandemic levels. The FY22 figures are still up 16.9% compared to the 1 July–21 November 2019 period. Showcasing just how much the business has thrived, despite COVID-19’s impact.

As for profit, the correlation is much the same.

The pre-tax numbers for 1 July to 31 October are down 35.5% from last year. But compared to 2019, they’re up 70.1%.

For that reason, it isn’t too surprising to see the share price rebound from its opening fall-off.

However, the real question is whether this lower revenue trend is an outlier or something more symptomatic. After all, there is still another seven months of the financial year left for HVN to turn things around.

Time will tell whether they can do so or not…

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What’s next for the Harvey Norman Share Price?

Looking ahead, for a business of Harvey Norman’s size, the goal is to stay the course.

There is little they can do to influence some of the bigger, macroeconomic influences at play. Including things like currency fluctuations or ongoing pandemic concerns.

In fact, for current investors, I think the real focus should be their ongoing expansion into Asia. Because while they already have a fairly decent presence across Southeast Asia, this large region still has a lot of potential in its massive market.

So today’s little blip shouldn’t be cause for too much long-term concern.

But, at the same time, I wouldn’t expect to see HVN shares breaking any records anytime soon. After all, it is difficult for such an established retail business to find and retain strong growth from anywhere.

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Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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