Harvey Norman repays handout

GOVERNMENT stimulus to spur home building and housebound consumers spending more on homes and gadgets have powered Harvey Norman to record earnings for 2021.

Following pressure from the federal opposition and community groups, Harvey Norman has also agreed to pay back $6.02m in Jobkeeper payments it received from the government.

In addition to booming local sales, the whitegoods, consumer electronics and furniture retailer’s property portfolio has increased in value by more than 11 per cent to $3.37bn, while overseas stores from Asia to Europe are delivering a growing portion of group profitability.

Harvey Norman has also released details of its latest overseas expansion, with the retailer announcing it plans to open two stores in Budapest, Hungary, in 2023.

Harvey Norman’s overseas operations are fast becoming a key driver of group profits.

However, the retailer’s core operations in Australia have been dented by the latest round of lockdowns across the eastern seaboard, with total Australian store sales in July and August down 19.2 per cent and same-store sales weaker by 19.1 per cent.

Harvey Norman on Tuesday posted a 75.1 per cent rise in full-year net profit to $841.41m as revenue for the year rose 14.9 per cent to $9.721bn.

Although the retailer lowered its final dividend, the strong results helped the company to lift its full-year dividend by almost 50 per cent. The final dividend, payable on November 15, was reduced to 15c a share, from 18c. But the full-year dividend of 35c a share was up from the full-year payout of 24c a share in 2020.

Harvey Norman’s decision to repay $6m in Jobkeeper comes after growing pressure on several big companies that posted bumper profits while receiving government aid.

Last year Harvey Norman and its franchisees received more than $22m in Jobkeeper payments.

For its flagship Australian business, Harvey Norman said home-focused consumers had continued to provide growth for franchisees during the financial year. There was strong growth in technology with strong demand for smartphones, gaming laptops and PCS.

Its Australian business posted a 12.8 per cent lift in sales to $6.95bn, with like-for-like sales better by 12.9 per cent. The Australian franchising operations segment delivered a record profit of $628.19m, an increase of $279.6m, or 80.2 per cent, from $348.59m in the previous year.

The retailer said with homes continuing to move quickly to being digitally connected, driven by remote working and learning, categories such as connected home, mobile technology and Wi-fi had surged.

There was a strong uptake of the federal government’s Homebuilder grants program and the renovations that have followed had led to strong demand for kitchen products, Harvey Norman said.

Strong sales continued in audio visual, with higher demand for big screen and inhome experiences. Furniture and bedding categories performed strongly.

Consumers also chose to upgrade and expand their outdoor entertaining areas.