Harvey Norman suffers €11m loss in six months despite sales hike

AUSTRALIAN electrical and furniture retailer Harvey Norman made a loss of A$17m (€11.1m) in Ireland in the six months to December 2009, despite an increase in sales in its stores in the Republic.

The chain’s southern stores had a 2% jump in sales, or a total of €75.3m. However, the weakness of the euro meant the value of the sales at the Irish operation were effectively down 6% when converted into Australian dollars.

As Harvey Norman, aged 70, explained: “It’s terrible, we’ve got a situation where we are losing a lot of money in Ireland and it’s not improving. I’m not counting on it improving, I’m counting on it staying as bad as it is and hoping and praying it gets bit better.”

Despite this, in an interview with Bloomberg Television, Mr Norman insisted the chain is committed to maintaining its presence in Ireland.

The chain has 14 stores in the Republic and two in the North. As well as the Irish stores’ €11.1m losses in the six months to the end of December, the company also wrote off another €650,000 linked to the value of its Irish assets.

However, the company has been able to offset its Irish losses due to a resurgence in the Australian housing market. Net income rose to A$158.9 million (€104 million), or 15 cents a share, in the same six month period.

Home-building approvals in Australia were up 53% on the previous 12 months, and this has driven sales of appliances and furniture.

While the chain did not open any new stores during the past year, it plans to resume its expansion plans in Australia, including teaming up with Ikea in 2012 for a retail complex in Melbourne.

Harvey Norman rose 1.6% to A$3.83 (€2.50) at the close of trading on the Australian Securities Exchange. The stock has fallen 9.2% this year.

Harvey Norman has 265 stores in Australia, New Zealand, Slovenia, Ireland and Singapore.