Harvey Norman’s profits have soared 29% higher to a new record

Photo by Robert Cianflone/Getty Images

Harvey Norman posted a record full year net profit after tax of $448.98 million, up 28.8%, as the homeware and furniture chain benefits from the housing boom and its overseas businesses gain traction.

“This is a record-breaking result that once again demonstrates the strength of our integrated retail, franchise, property and digital business spanning eight countries,” says chairman and founder Gerry Harvey.

“In an ever-changing retail environment, our model continues to adapt and be resilient.”

However, Harvey Norman shares came under pressure. A short time ago, they were down 6.5% to $4.12.

Franchisee sales were up 5.4% to $5.62 billion. Company operated sales revenue was 2.1% higher at $1.83 billion.

The company-operated retail profit before tax profit increased 24.3% to $90.85 million, compared to $73.11 million in the previous financial year.

Harvey says this record result is built on strong performances in offshore operations. The company operates in New Zealand, Slovenia & Croatia, Ireland, Northern Ireland, Singapore and Malaysia.

In Singapore and Malaysia, retail segment profit was up 69.9% to $19.30 million.

In Australia, franchisee headline aggregated sales revenue has increased by 5.4% to $5.62 billion.

“Housing and renovation activity continues to be robust, and the large-store formats of the franchised complexes and their tech-savvy staff have really been able to showcase the integration of the latest innovations in home lifestyle technology that is really capturing the imagination and excitement of consumers,” says Harvey.

“This solid growth in franchisee sales reflects an economy where retail spending remains above decade averages, particularly in NSW and Victoria, underpinned by strong housing sector activity, lower levels in unemployment, a net increase in overseas migration, and the wealth flow-on effect from higher home prices.

“Consumer housing finance commitments remain a key factor when it comes to home and lifestyle retail spending, and are positive when looked at in comparison with decade averages, despite some moderation outside the eastern states from the levels of the previous year.”

The company declared the payment of a fully-franked dividend of 12 cents a share, bringing the full year payout to 26 cents, down from 30 cents last year. The board is reviewing capital management options, including a possible share buy-back.

The Harvey Norman 2017 numbers at a glance:

Source: Harvey Norman