Harvey Norman shares down despite revealing sales growth in March

Harvey Norman Holdings Ltd (ASX: HVN) shares are down today despite a positive business update on how it has performed in the month to date, in light of growing global uncertainty.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Harvey Norman Holdings Limited (ASX: HVN) shares are down today despite a positive business update on how it has performed in the month to date, in light of the growing global uncertainty caused by the coronavirus pandemic.

Harvey Norman has seen a 43% decline in the value of its shares since February 20, with its share price declining from $4.81 to be currently trading at $2.75. However, Harvey Norman has fared better than department retailer Myer Holdings Ltd (ASX: MYR), which has taken a 60% hit to its share price during this time.

Comparable sales higher in the first half of March

This morning, Harvey Norman revealed that its Australian franchises, which include Domayne and Joyce Mayne, have seen a 9.4% increase in comparable sales for the period from March 1 to March 17, compared to the prior corresponding period in 2019.

The ASX retailer reported that New Zealand operations have also seen strong growth of 12.4% during this period in constant local currencies, while Ireland sales have increased by 53%. Northern Ireland, however, has seen a 12.4% decrease in constant currency sales, while Singapore operations have declined by 1% and Malaysian operations by 5%.

Most Harvey Norman stores globally remain open

Harvey Norman noted that Malaysian stores have been closed from 18 March 2020 to 31 March 2020, by order of the government. Also, its Croatian store has been shut from March 19 for a 30 day period.

However, it is business as usual for now for Harvey Norman, Domayne and Joyce Mayne franchise stores throughout Australia. Also, its wholly-owned company-operated stores in New Zealand, Ireland, Northern Ireland and Singapore are all open for now.

Apart from the impact of the coronavirus crisis, Harvey Norman shares have been under pressure recently due to a disappointing half year result for H1 FY 2020. Harvey Norman reported a 1.9% increase in total sales to $4.07 billion, while comparable store sales in Australia were flat during the half. Profit before tax fell 4.6% to $301 million, while net profit slumped 4.1% to $214 million.

Will Harvey Norman ramp up online sales?

While Australian stores remain open, it is likely that Harvey Norman will be faced with the same challenges as other retailers, with some consumers staying away from shops for non-discretionary spending.

Online shopping is one strategy that I am sure Harvey Norman will be looking to utilise. The retailer currently does offer an online purchase option and will very likely be looking at strengthening this option in the months to come.

I would expect that competitor JB Hi-Fi Limited (ASX: JBH) will also be looking at ramping up its online option, especially as Amazon has been increasing its presence here in Australia over the past year.

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Coronavirus News

Man with his hand on his face looking at a falling share price chart on a tablet.
Share Market News

ASX 200 stocks dive 2.4% in worst trading day since Ukraine crisis hit

It's not a good start to the week for the market.

Read more »

A woman looks nervous and uncertain holding a hand to her chin while looking at a paper cut out of a plane that she's holding in her other hand. representing the falling Air New Zealand share price today
Travel Shares

Borders just reopened so why is the Flight Centre (ASX:FLT) share price falling today?

Experts believe it may take several years for tourism levels to rebound to pre-pandemic numbers.

Read more »

A worker in hi vis gear holds his hand up saying no.
Coronavirus News

Own BHP (ASX:BHP) shares? Here's how the ASX 200 miner is battling COVID

Mining unions have not generally supported mandatory vaccinations.

Read more »

Female worker sitting desk with head in hand and looking fed up
Coronavirus News

Here's what Rio Tinto (ASX:RIO) boss says is 'causing some challenges' right now

The Omicron variant is spreading in Western Australia.

Read more »

A man wearing a mask punches the air with joy after getting a negative COVID result on a rapid antigen test.
Coronavirus News

Why are ASX COVID test shares climbing today?

COVID-19 tests are in focus again today.

Read more »

a girl stands in an apple orchard holding two red apples in raised arms with a happy, celebratory look on her face with a large smile and a pretty country background to the picture.
Economy

CBA reveals the Australian economy's leading state amid COVID surge

The states and territories have all been impacted by the pandemic.

Read more »

Rapid Antigen Test taking place.
Share Market News

Why is Ellume hitting headlines today?

Brisbane-based diagnostics developer Ellume is back in the headlines.

Read more »

A woman looks quizzical as she looks at a graph of the share market.
Share Market News

Inghams (ASX:ING) share price sinks as Omicron bites

Inghams shares are down as COVID hurts its operations.

Read more »