Harvey Norman profit falls 19%

Impacted by net property revaluation, joint venture impairment.

Harvey Norman has reported a 19.3% slide in net profit after tax for the half year ended 31 December 2017 due to a reduced net property revaluation and $20.67 million impairment loss for the write-down of its dairy investment, the Coomboona Holdings joint venture.

Excluding the above significant items, underlying profit before tax was $296.08 million – an increase of 0.8% compared to the previous corresponding period.

Since releasing its half year results at 10.00 AEST, the Harvey Norman share price has dropped more than 13%.

Harvey Norman chairman, Gerry Harvey said, “The strength, stability and flexibility of our expansive, high-quality retail developments continues to be an integral point of difference, and this allows us to maximise the ability of our physical retail offerings to provide a complete interactive customer experience.”

Company-operated retail segment

Harvey Norman’s company-operated retail segment saw an 11.3% increase in profit and a 4.5% increase in revenue. All overseas company-operated stores reported sales growth, higher profitability and market share gains.

Ireland & Northern Ireland

  • Sales revenue for Ireland was up by $24.93 million due to the 3.73% appreciation in the Euro and opening of the Tallaght flagship in Dublin in July 2017
  • Sales revenue for North Ireland saw a slight increase by $0.16 million due to continued dominance of Boucher Road, South Belfast flagship store, slightly offset by the 0.15% devaluation of British Pound

Singapore & Malaysia

  • Sales revenue for Singapore and Malaysia was up $13.11 million
  • Continued strong performance of the Millenia Walk superstore, opening of the new Viva City factory outlet and expansion of existing stores at Parkway Parade and North Point City in Singapore
  • Full 6-month trade of the Sunway Velocity store in Malaysia and re-opening of the reinvigorated flagship at Ikano, Kuala Lumpar

Slovenia & Croatia

  • Sales revenue for Slovenia and Croatia was up $13.08 million
  • Appreciation in Euro and redevelopment of the Ljubljana flagship store in Slovenia
  • Croatia performed well and this trend is expected to continue after the relaunch of the reinvigorated Zagreb flagship store later in the year

New Zealand

  • Sales revenue for NZ was up $2.69 million with a full 6-month trade of the Queenstown store and strong sales growth during key promotional periods
  • Modest sales and market share growth in New Zealand amidst a slowdown in the economy and cooling housing market in Auckland
  • Offset by $10.25 million reduction in sales revenue from other non-franchised retail controlled entities

Franchising operations segment

Australia

  • Aggregated franchisee sales revenue increased 4.8% compared to the previous half year, breaking the $3 billion barrier for the first time for a December reporting period
  • Comparable sales saw a 4.1% increase compared to the previous half year
  • Profit from franchising operations was down 2.9% to $167.21 million
  • Performance of Australian franchisees described as solid ‘given the increased competitive landscape and franchisees’ additional investment in staff wages’
  • Aggregated sales for the period 1 January to 26 February, 2018 increased by 0.5% compared to the previous corresponding period and 0.2% on a comparable sales basis impacted by a double digit fall in seasonal sales

Commenting on the result, Harvey Norman chairman, Gerry Harvey said, “Our franchisees continue to be dominant in the home and lifestyle categories – with an increase in aggregated sales revenue of 4.8% from this period last year. This is a really solid result when you consider the previous half-year period saw the strongest results on record and it shows our franchisees have kept up that momentum to deliver an unprecedented result.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up To Our Newsletter

Sign up to receive Appliance Retailer’s newsletter for the latest announcements and product news from the leading brands and retail groups within the appliance and consumer electronics industry.

You have Successfully Subscribed!