Harvey Norman's first-half profit has slumped 17 per cent as electronics price deflation hit the retailer's profit margins.

Net profit after tax was $131.7 million, compared with $158.9 million in the previous corresponding period.

The company will pay a reduced interim dividend of 6 cents a share, fully franked, down from 7 cents in the previous two halves.

The company's founder and chairman Gerry Harvey blames the fall in consumer spending for triggering heavy discounting in the electronics sector.

"Our profit was down as a result of price deflation in key categories driven by the strong Australian dollar, the challenging retail environment, and also the extreme wet weather on the east coast of Australia that affected sales of seasonal products," he explained in a statement.

The Clive Peeters and Rick Hart stores that Harvey Norman bought from theirs administrators also dragged on the company's profits, making a combined $20.7 million pre-tax loss, due largely to restructuring costs and heavy discounting to get rid of old inventory.

Gerry Harvey says the outlook for the company remains positive despite the difficult trading conditions, but declined to offer a specific updated future profit guidance in his chairman's report.

Investors took his word for it, with Harvey Norman shares up 0.7 per cent to $3.04 by 11:32am (AEDT) in a fairly flat market.