Harvey Norman upbeat as losses are cut

The directors of the Irish arm of retailer, Harvey Norman remain upbeat over the group’s future after last year reducing losses for the fourth year in a row.

New accounts just filed by Harvey Norman Holdings (Ireland) Ltd show that the group’s underlying operating losses last year totalled €15.4m, representing a reduction of 12.2% from the prior year.

The directors state that when adjusted for foreign exchange revaluation variances, the loss for the year was €14m, which was a 25% improvement on fiscal 2013.

Revenues at the retailer increased by 3.5% from €144.2m to €149.25m in the 12 months to the end of June last.

According to the directors’ report, given the continuing challenging retail environment and reduced consumer confidence, the directors are satisfied with the group’s performance.

The report states that “the directors are satisfied with reduction in the underlying operating loss. This result reflects the continuing trend within the Irish business of material loss reduction, this being the fourth year of loss reduction within the Irish business. The directors are confident the trend will continue”.

The report adds: “Strong like-for-like sales performance this year reflects the early signs of some improvement in the Irish economy and an upturn in consumer sentiment.

The directors state that the group “has continued to grow market share, improve store and operational efficiencies and refine its marketing and brand positioning.”

They report store footfall grew throughout the year with strong uptake in cash and carry items.

The directors state that property-related costs are a significant element of the group’s operating costs and progress has been made in reducing rental costs in key locations.

They state that retail rents across the sector continue to be badly distorted and do not reflect the current market.

The accounts show that the group last year paid €12.86m in operating lease rentals compared to €13.29m paid under that heading in 2013.

The directors state that they will continue to focus on trying to reduce these costs to more sustainable levels across all stores.

The directors state that gross profit increased by 15.2% or €5.9m with gross margin increasing by 3% for the year.

According to the directors, their key focus going forward is on ensuring that the group continues to take measures to ensure that the group can capitalise on the improving economy.

The accounts show that pre-tax losses last year reduced by 32.5% from €11m to €7.43m.

The shareholders’ deficit at the end of June last stood at €98.96m and a note attached to the accounts states that the group’s liabilities are guaranteed by the group’s parent.