Signs of a small pickup in sales boosted Harvey Norman (ASX:HVN) shares by 3% on the ASX Wednesday morning as the consumer electronics and white goods group held its annual meeting for 2022-23.
The retailer indicated that trade has picked up in recent weeks but is still heading for a weak performance in the first half of its 2023-24 financial year.
Thanks to what seems like a timely boost from Black Friday discounting, the electronics and homewares giant reported a 7.8% fall in sales over the last five months, with same-store or comparable sales down 8.7%. This marks a slight improvement from four weeks ago when the retailer warned that pre-tax profits had halved in the September quarter, and sales had tumbled by 9.1%, with comparable store sales down 10%.
However, the main reason for this slight improvement has been the recent strengthening of the Aussie dollar. Harvey Norman confirmed this on Wednesday when it stated that sales were boosted by exchange rate movements since July 1.
The Aussie dollar is trading around 66.60 US cents on Wednesday in Asia, roughly where it was at the end of June, but up about 5% from the low of just under 63 US cents in early October.
Retail sales have been weak since June. July saw a rise of 0.5%, August a rise of 0.2%, September a jump of 0.9%, and October a drop of 0.2%, with every category except food experiencing a decrease.
Harvey Norman's core business, its Australian franchisee-owned stores, has seen an 11.9% slide in comparable store sales so far this financial year, according to Wednesday's report. While this is an improvement on the 13.9% decline in the first quarter when foot traffic in stores was down sharply, it is a much worse performance than Harvey Norman's major rival, JB Hi-Fi, which has only reported a small fall in comparable sales in its business but a larger drop in comparable store sales in its Good Guys white goods business, indicating a significant problem area.
Comparable store sales rose in Ireland, Northern Ireland, and Singapore but fell in Malaysia, Slovenia, Croatia, and New Zealand.
