Retail giant savours profit

Surge in sales boosts Harvey Norman result

RETAIL giant Harvey Norman has delivered a robust annual profit and sales result but the coronavirus crisis has dented the furniture and electrical chain’s aggressive overseas expansion plans.

Harvey Norman, which operates across Australia, New Zealand, Asia and Europe, reported a 19.4 per cent lift in full-year net profit to $480.54m for the year to June 30, as sales revenue rose 7.6 per cent to $8.23bn.

But due to the global pandemic, the retailer has cut the number of new stores it plans to open from 21 to 12.

In a trading update provided with the release of its full-year results, Harvey Norman said same-store sales growth in Australia between July and August was up 38.4 per cent, up 54.9 per cent in Ireland and up by 29.1 per cent in Slovenia and Croatia.

Harvey Norman said it had also benefited from rising property values, which it uses to complement its core retail business of whitegoods, furniture, bedding and consumer electronics.

The value of its assets, led by property, are almost at $3.5bn.

The retailer has also emerged from fiscal 2020 with a positive cash position, having paid down hundreds of millions of dollars in debt.

Profit before tax was $661.29m, an increase of 15.1 per cent from $574.56m in the previous year.

Harvey Norman chairman and co-founder Gerry Harvey said the 2020 financial year had been a year of “unique challenges”.

“The drought and bushfires last summer, followed by COVID-19, had a significant impact in the eight countries where we, or our franchisees, trade.,” he said.

“Pleasingly, customers continued to engage strongly with our brands.’’

Mr Harvey said the annual results were a testament to the strength of the company’s business model.

The retailer ended the fiscal year with a net cash position of $15.35m, compared to a net debt position of $626.47m as at 30 June 2019.

The net debt to equity ratio for 2020 was zero, compared to a net debt to equity ratio of 19.46 per cent in 2019.

Harvey Norman will pay a fully franked final dividend of 18c a share, down from 21c a share last year.