The Harvey Norman Holdings Limited (ASX: HVN) share price is down again today as investors continue to react to the furniture retailer's 1H FY23 results.
The Harvey Norman share price is currently down 0.78% at $3.82.
Yesterday, the shares closed the day down 7.45% after the company revealed a 15.1% decline in reported net profit after tax (NPAT) to $365.9 million.
Not only that, but Harvey Norman slashed its interim dividend by 35% to 13 cents per share fully franked.
Gerry Harvey slams the Harvey Norman share price drop
The head of Harvey Norman, Gerry Harvey, has told The Australian that investors overreacted to the results after the Harvey Norman share price fell by as much as 12% during intraday trading yesterday.
Harvey said:
Harvey Norman is on a 6 per cent dividend yield, or better, at $4 a share and we only paid out half (our earnings) in dividend; if we paid out the lot it would be a 12 per cent dividend fully franked. We have a wonderful record of paying dividends over 35 years.
We've got a long record that's very, very good and so the market … should be delighted, not disappointed.
He also criticised general talk about the weakening economy as inflation and interest rates rise:
In the big picture everything is quite good. It is not as good as it was going but we aren't going into recession. We can't get people to work in agricultural, hospitality so how others can talk about how we are going into a recession – they are leading people astray.
The story every day that interest rates are going up, people are suffering and things are going to get worse – well of course people are going to hold back if they read that every day but the reality is those people are very much in the minority and the great bulk of people out there, 9 out of 10, are doing quite well.
Be greedy when others are fearful…
So, here's the plus side to this alleged overreaction. It's called buying the dip. Investors who are committed to Harvey Norman now have an opportunity to average in at a discount.
The shares closed at $4.16 on Tuesday, the day before the results were released.
Today, the ASX retail share is trading at $3.82. That's an 8.2% discount from where it was two days ago.
Following the half-year results, top broker Goldman Sachs has retained its buy rating with a trimmed 12-month price target of $4.70.
This implies an upside potential of 24%. The broker is tipping a 9.3% dividend yield in FY23.
