The Harvey Norman Holdings Limited (ASX: HVN) share price is falling on Wednesday. At the time of writing, shares in the company are down 2.41% to $5.065 apiece.
This follows the release of the retailer’s trading update for the period between 1 July 2021 and 21 November 2021.
Let’s take a look at how the company has fared.
Hard to beat record sales
In its update today, Harvey Norman has informed investors of a weaker start to the new financial year than its previous.
According to the release, aggregate sales revenue for the first 4 months and 20 days came in 8.8% lower than last year. For reference, the same period in 2020 was one of record performance for Harvey Norman.
At that time, sales revenue posted a year-on-year growth of 28.2%. Meanwhile, aggregated sales revenue is up 16.9% when compared to the pre-COVID-19 months in 2019.
A depreciation in multiple currencies where Harvey operates contributed to the weaker sales revenue growth. Namely, a 2.9% depreciation in the Euro, a 1.7% depreciation in the Singaporean dollar, and a 2.9% depreciation in the Malaysian Ringgit.
Although, this was partially offset by a 2.7% and 3.0% appreciation in the New Zealand dollar and UK pound respectively.
Similarly, the company’s profit before tax took a tumble compared to the prior corresponding period. Unaudited preliminary accounts for the period indicated a profit before tax of $217.42 million. This represents a 35.5% fall compared to last year’s $337.11 million. This significant drop in profits could be influencing the Harvey Norman share price fall today.
However, the retail giant is in a much better position than pre-COVID. Profit before tax is up 70.1% compared to the 2019 period.
Malaysia and Australian franchisees were the most impacted countries for sales revenue during the period. On a comparable basis, these regions were down 24.6% and 11.1% year on year.
Harvey Norman share price under the microscope
While the Harvey Norman share price remains above its pre-COVID levels, it has performed roughly in line with the benchmark index.
Since the start of 2021, the retail giant has gained 8.5%. Though, this fails to exceed the S&P/ASX 200 Index (ASX: XJO) which has climbed 10.9%.
The Harvey Norman share price currently trades on a price-to-earnings (P/E) ratio of 7.7 times.
The post Harvey Norman (ASX:HVN) share price falls as profit before tax sinks 35.5% appeared first on The Motley Fool Australia.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Harvey Norman Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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