P’s consumer equities analyst, said he expected Harvey Norman’s after-tax profit to fall to about $470 million this year from $673.6 million in the 12 months to the end of June 2022.
“The exact timing of the impact from slowing consumer/high base effects on discretionary retailer earnings has been difficult to forecast to date. It appears to now be hitting for many discretionary retailers post March/April,” Mr Kimber added.That view is shared by others in the market who are warning 12 Reserve Bank interest rate increases have finally caught up with household budgets, with spending to suffer.
“Consumption had been remarkably resilient, underpinned by a ‘catch-up’ of spending due to the late reopening of the economy, combined with a very strong labour market, which led households to run down their savings ratio very sharply to 3.7 per cent, the lowest since the [global financial crisis],” UBS wrote. “However, we are now seeing signs of cracks emerging.”