Retailers watch TV screens fall flat, Gerry Harvey says

RETAILERS of flat-screen televisions are struggling to make a profit, Harvey Norman boss Gerry Harvey says.

Sellers of flat-screen TVs have experienced massive deflation, Gerry Harvey says / File

RETAILERS of flat-screen televisions are struggling to make a profit during a tough trading period, Harvey Norman boss Gerry Harvey says.

He said retailers were experiencing difficult times.

"We are having a real dreadful period at the moment,'' Mr Harvey said in a response to a question at the company's annual general meeting in Sydney yesterday.

Sellers of flat-screen TVs had experienced massive deflation, with Australian retailers unlikely to profit from current sales, Mr Harvey said.

"Australia has actually demolished the pricing of this product more than any other country in the world,'' he said.

"The prices we are selling them at are absolutely impossible to make any money and we have demolished the price.

"The manufacturers are losing a fortune, we are losing a fortune and the category that everyone is in - flat screen TVs in Australia - is severely damaged. Not damaged, severely damaged.''

Mr Harvey said flat-screen TVs was a big category for his company and the current discounting of the products would hit his company's profits for the first half of the 2011 financial year.

"It is (an) unsolvable problem for us at the moment,'' he said. ``It is having a big impact on our profit because that is one of our major product categories.

"You are going to see a pretty sizeable fall in profit for the six months that we are in now and I don't know how that is going to go in to next year.''

Harvey Norman shares closed down 7c, or 2.25 per cent, at $3.04, after hitting $3.03 - its lowest price since July 10, 2009.

Consumer confidence had been knocked by the interest rate rise this month, Mr Harvey said.

He said he thought there had been about a 50:50 chance of the central bank lifting the overnight cash rate on November 2.

The RBA lifted the cash rate a quarter of a percentage point to 4.75 per cent.

Subsequently, the commercial banks lifted their standard variable lending rates well above the RBA's move.

"We have certainly been affected with practically every category we sell,'' Mr Harvey said.

"There is a big consumer lack of confidence.''

"If you're in retail, you have been really belted at the moment.'' Mr Harvey said he was not overly optimistic about the retail sector over the following year.

"The situation is a lot of people are going to have big cash-flow problems,'' he said.