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Shares of Australian furniture and electronics retailer Harvey Norman Holdings Ltd (ASX:HVN) dropped as much as 6.5% to AU$4.57 on Friday, marking their steepest intraday decline since June 26. This sell-off brings the stock to its lowest level since 9 August 2024, capping off four consecutive days of losses.
Earnings Miss and Sales Decline Drive Stock Lower
Harvey Norman’s sharp decline in share price follows the company’s announcement of its FY24 financial results, which fell short of market expectations. The retailer reported a statutory net income of AU$352.5 million (approximately $239.56 million), down nearly 35% from the previous year. This figure also came in below the Visible Alpha consensus estimate of AU$365.2 million, disappointing investors who had expected better performance.
In addition to the earnings miss, Harvey Norman revealed that total system sales revenue for FY24 declined to AU$8.86 billion, down from AU$9.19 billion in FY23. This drop in revenue further dampened investor sentiment, contributing to the stock's sharp decline.
Comparable Sales and Market Performance
The company’s comparable sales performance varied across markets, with July 2024 sales showing a mixed picture. While Australia saw a 3.3% increase in comparable sales, and Slovenia & Croatia posted a 7.1% rise, most other markets experienced declines compared to the previous year. This uneven sales performance added to concerns about the company's overall growth prospects.
Stock Performance in Context
Despite the recent downturn, Harvey Norman shares had gained approximately 15% in July. However, with the latest sell-off, the stock is set to end August down 1.8%. As of the last close, HVN shares were still up 12.3% year-to-date, though this recent pullback has put a dent in those gains.
Harvey Norman's disappointing earnings report and subsequent stock decline have made it the second-biggest loser on the ASX 200 benchmark index on Friday.
