Harvey Norman in world of profit
HARVEY Norman boss Gerry Harvey says overseas business could account for more than half of his retail empire’s profits in five to 10 years.
Overseas Harvey Norman stores contributed $ 90.85 million towards a record net profit of $ 448.98 million for 2016- 17, up 28.8 per cent on the prior year.
Strong growth from New Zealand, Singapore, Malaysia, Slovenia and Croatia, and a 62 per cent reduction in losses in the Irish business, lifted profit from overseas by 24.3 per cent compared to 2015- 16.
“This is the best result we have ever had and it has a lot to do with the total overseas contribution getting close to $ 100 million in profit,” Mr Harvey, the co- founder and chairman of Harvey Norman, said.
“The overseas business is coming into play in a much better way than it has ever done before.”
Mr Harvey is hopeful of doubling overseas profits within three years by growing store numbers and profit margins in its current seven markets.
“And it is possible – I don’t think it’s a stupid thing to say now – that half our profit will come from overseas,” he said. “I’m talking five to 10 years away.”
International segment’s revenue rose 2.1 per cent to $ 1.83 billion with comparable sales up 4.5 per cent.
In Australia, franchisee sales revenue across the company’s Harvey Norman, Domayne and Joyce Mayne stores rose 5.4 per cent to $ 5.62 billion.
A booming property market and a boost to consumer electronics sales from the collapse of rival chain Dick Smith last year helped the result.
Higher franchise fees, strong rental income and a more than doubling in the group’s property values all contributed to the record group profit.
For Australia, Mr Harvey expected the strong housing market, fuelled by population growth, to continue to lift sales of furniture, fridges and televisions during the current financial year.
The company is reviewing options, including a possible share buyback.
Mr Harvey said the final dividend of 12c, down five cents on the prior year, would allow the company to direct some profit towards store upgrades and overseas expansion.
Shares in Harvey Norman were down 7.3 per cent to $ 4.10 by 3.35pm.
Citi analysts said the company’s fourth- quarter sales and July- to- August trading update’s comparable sales growth numbers were below market expectations, reflecting an easing housing market.
Harvey Norman has 39 outlets in New Zealand, 13 in Singapore, 15 in Malaysia, 12 in Ireland, two in Northern Ireland, five in Slovenia and one in Croatia, and 194 franchised stores in Australia.