The country's biggest electronics and furniture retailer, Harvey Norman, has blamed deflationary price pressures in television sets and computers for its shocking 39 per cent plunge in pre-tax full year profit to $227.6 million.
"The results are worse than we expected," said Gerry Harvey, chairman and co-founder of the retail chain.
"There are more retailers than before going out of business in the last 18 months and the road ahead is not going to be nice," he said.
The plunge in Harvey Norman's unaudited preliminary accounts includes a property writedown of $25m. Mr Harvey said that he had expected results to be down by between 20 per cent and 25 per cent. "But now, our results are down by 30 per cent excluding property writedowns," he said.
The profit guidance came as Harvey Norman said full-year sales fell 7 per cent to $5.74 billion, compared to the previous year. Like-for-like sales also decreased by 6.5 per cent.
Mr Harvey said television sets now cost $1000, less than half what they used to cost two to four years ago.
"Computer lap-tops cost $3500 five years ago - now we can pick an even better one for $500.
"Price deflation in TVs and computers is happening across the world - it's a big problem. Products are being sold for less than what it costs to produce them.
"Its good for customers but not for retailers," Mr Harvey said.
Harvey Norman shares lost 0.89 per cent, shedding 2 cents to $1.95 today as the benchmark S&P/ASX 200 rose 1.16 per cent.
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