Harvey Norman’s shares tank as retailer’s profits plummet

Harvey Norman’s shares have dropped sharply after a decrease in profits, but co-founder Gerry Harvey has dismissed concerns saying investors ‘got it wrong’.

The retailer’s profits plummeted almost 20 per cent to $208million for the six months between June and December 2017, the ABC reported.

The fall came despite a 5 per cent increase in sales revenue. Multi-million dollar losses and asset devaluations forced the profit margin into the negatives after a joint venture dairy farm and stud in Coomboona, Victoria.

Harvey Norman’s investment into the dairy farm and stud has been completely written off after a dispute with its joint venture partner.

Harvey Norman’s share price has dropped 13 per cent to $3.99 by 10.30am on Wednesday.

The company’s co-founder and executive chairman Gerry Harvey said the sharemarket’s reaction to its results were wrong.

‘I just think they have got it wrong. I don’t get why they do that and it makes it an extraordinary good buy for anyone.’ he told The Australian.

‘So the market has just got it wrong, simple as that, they just don’t get it. The result isn’t bad, there is nothing wrong with the result at all, so if they are knocking it, why are they knocking it, they have to give a good reason and that escapes me as to what good reason they can give.’ 

Mr Harvey said the $20.7million investment write-off was ‘nothing’ for the company, which he said was worth $4billion or $5billion. 

He said the company had its best ever year overseas at stores across New Zealand, Slovenia, Croatia and Ireland.

The retailer’s profits plummeted almost 20 per cent to $208million for the six months between June and December 2017