David RichardsTech Retailers Profits Set To Be Hit By Rising Dollar
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Mass retailers JB Hi Fi, The Good Guys, Dick Smith and Harvey Norman are facing a fall in profits due to the strong Australian dollar claim senior executives.
Among goods sets to be hit are PCs, flat screen TVs, Smartphones and the highly profitable accesories section.
The retailers have seen prices on items such as flat-screen TVs plummet and is likely cause profits to plunge this year in the sector, The Australian Financial Review reports.
Harvey Norman Ltd chairman Gerry Harvey and JB Hi-Fi Ltd chief executive Terry Smart told the newspaper that increased production in Asia and competition between suppliers had seen prices drop by up to 30 per cent.
They said the rise in the dollar was more harmful for profit margins than lacklustre consumer confidence during the global financial crisis.
“The GFC was bullshit – this is a lot worse now for people in this particular space,” Mr Harvey said.
Mr Smart said his company was trying to stem the impact of price deflation by selling high volumes of products, but admitted that the increasing trade was not enough to offset plummeting profit margins.
Analysts anticipate cautious earnings outlook comments at JB Hi-Fi’s annual meeting today and Harvey Norman’s next month, the AFR said.