Harvey Norman stores in New Zealand have reported a notable decline in profitability for the year ended 30 June 2023. The figures reveal a concerning shift in the retailer's performance, with sales revenue falling from NZ$1.21 billion in 2022 to NZ$1.11 billion in 2023.
The comprehensive income statement indicates that despite a decrease in the cost of sales from NZ$777.6 million to NZ$753 million, the gross profit took a significant hit, dropping from NZ$427.6 million to NZ$362.6 million. This stark decrease in gross profit surpasses the marginal savings achieved through reduced expenses, painting a picture of a retailer grappling with shrinking profit margins.
While other income showed a slight increase, rising to NZ$12.3 million from NZ$11.5 million the year prior, it did little to offset the broader downward trend. The overall expenses across various categories saw a reduction, suggesting the implementation of cost-saving strategies within the company. Despite these efforts, the profit before income tax suffered a steep decline, standing at NZ$63.5 million, a fall from the previous year's NZ$96 million.
After accounting for income tax expenses, which also fell in line with the lower pre-tax profits, the net profit and total comprehensive income for the year settled at NZ$45.9 million. This represents a substantial decline from the NZ$69.2 million reported in 2022, marking a decrease of approximately 33.6%.
'Statement of Financial Position' highlights that the company's total assets have increased to NZ$575.8 million from NZ$563.5 million the previous year. This increase is partly due to a rise in non-current assets, such as property, plant, and equipment and right-of-use assets. However, the more liquid current assets have seen a significant reduction, particularly in cash and cash equivalents, which plummeted from NZ$55.6 million to just over NZ$12.2 million.