Harvey Norman profit up

Overseas stores do well but home front struggles

HARVEY Norman has lifted first-half profit on a strong performance at its overseas ventures, but sales at the company’s Australian franchises were weak.

The homewares and electronics retailer announced a 7.3 per cent increase in net profit to $222.8 million yesterday as it continues to roll out its flagship store program.

Total sales revenue for the six months to December 31 rose about 16 per cent to $1.18 billion, helped by what the company deemed its strongest-ever performance from its overseas company-operated stores.

Harvey Norman said 25 per cent of its consolidated profit now comes from overseas, up from 3 per cent at its interim result a decade ago, with a new flagship outlet in Zagreb, Croatia, coming online from October.

“The last six months have seen outstanding results from our stores in Singapore and Malaysia, building on the growth we’d already experienced in the region and really delivering in an impressive manner,” chairman Gerry Harvey said.

Things were less rosy for the company’s Australian franchisees, which experienced a 0.6 per cent decline in comparable sales, accelerating in January and February.

The company blamed the clumping of Australia Day, the start of the school year and the Lunar New Year in the same week for the drop-off in sales figures at the start of the second half.

It also booked a $9.7 million loss on the restructure and consolidation of its partnership with educational equipment provider KEH, of which it took an increased stake in July.

Mr Harvey said the company’s property portfolio remained robust, valued at $2.93 billion and representing approximately 93 per cent of the total net asset base.

“Our property portfolio continues to be a major point of difference for us, and is a real competitive advantage against emerging or restructured competitors – both big or small, online or physical,” Mr Harvey said. “It keeps us a step ahead and provides the flexible, large footprint needed to showcase the best on offer.”

Harvey Norman has maintained its interim dividend of 12 cents a share, fully franked.