Harvey Norman says it is complying with market rules following a ''please explain'' notice from the ASX after its shares fell more than eight per cent yesterday, wiping hundreds of millions off its market capitalisation.

Shares in the Australian-based homewares and electronics retailer, which operates 39 stores in New Zealand, fell 8.2 per cent - it's biggest decline in five years with the company offering no explanation to the market for the drop.

In response to the Australian stock exchange notice issued yesterday, Harvey Norman said it was "not aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain recent trading in its securities".

The fall comes after two of its directors sold off more than A$2.5 million ($2.74m) of shares in consecutive days.


Managing director Katie Page sold A$1.06m worth of shares on March 14, although this represents a small portion of her shares.

Long-time Harvey Norman executive director David Ackery sold A$1.5m worth of shares the next day on March 15 to pay off an ANZ loan he had secured against his stake in the retailer.

When the shares began falling yesterday, chairman Gerry Harvey increased his controlling stake in the company, buying up two million shares for A$8.7m, which also shored up the share price.

Shares in Harvey Norman hit an eight-year high of $5.38 last August, but have fallen 16 per cent since it posted a better-than-expected, half-year profit in February.

The share trades also coincided with the release of a report by financial services group Credit Suisse which named Harvey Norman as one of four listed Australian retailers which were most exposed to online giant Amazon's expansion.

Research by the company showed Myer was at the highest risk followed by Harvey Norman then JB Hi-Fi and Super Retail Group.

Amazon has not officially announced a move into Australia or New Zealand, however, there have been increasing reports that it is preparing to move into the Australasian market.

Katie Page and Gerry Harvey. Photo / AAP
Katie Page and Gerry Harvey. Photo / AAP

The ASX announcement also included questions about an Australian Financial Review (AFR) article published this weekend which raised questions about transparency of the company's accounts and its franchisee business.


The AFR claimed 110 Harvey Norman franchisee operations failed every year, and questioned how losses associated with these closures were reported by the company.

In response to the ASX notice, Harvey Norman said: "The AFR article makes false statements and assumptions and then proceeds to make assertions and draw conclusions which are also false, based upon those false statements and assumptions".

It said the company was in compliance with its listing and continuous disclosure obligations.