Over the next five years.
Harvey Norman has revealed plans to expand its overseas business by up to 50 per cent over the next five years as its international division delivered its best-ever trading result accounting for 22 per cent of profit.
The current international store count of 89 stores could increase by 50 per cent, mainly driven by growth in South East Asia, with the number of stores in Malaysia alone increasing from 16 stores to 50 stores by 2023.
The company has announced plans to “invest substantially” in growing its offshore Harvey Norman store network and expects to open 18 new stores within the next two years – mainly in South East Asia – with nine new stores in Malaysia and three in Singapore. Three new stores are planned in Croatia, two new stores are planned in Ireland and one new store is planned in New Zealand.
This will represent the “beginning of the our biggest organic growth spurt in over a decade” the company said in a presentation to market analysts.
The company currently operates 540 franchisees and 195 franchised complexes, which is substantially larger than its overseas business where only 89 offshore company operated stores are currently operating in seven international regions.
The $116.13 million profit from company-operated offshore retail operations is up 15.1 per cent from $100.86 million in the previous financial year and now represents 22 per cent of the total consolidated profit before tax.
The company confirmed that this is the best-ever trading result and the highest profitability of Harvey Norman company-operated stores both individually and in aggregate since the overseas operations commenced.
With the overseas operations, the Singapore and Malaysia operations increased by $5.71 million or 30 per cent to $25.01 million, Ireland and Northern Ireland increased by $3.90 million after a loss last year, New Zealand increased by $2.88 million or 3.6 per cent to $82.31 million with Slovenia and Croatia increasing by $2.77 million or 60 per cent to $7.4 million.
From the company’s Australian franchising operations, profit was down by 7.2 per cent to $282.54 million due to what the company described as a combination of lower franchise fees received and higher tactical support to protect, promote and enhance the brands in addition to a rise in other costs to operate the franchising operations segment.
Harvey Norman confirmed that each offshore region has delivered their best trading result and highest profitability, both individually and in aggregate, since launching overseas.
Harvey Norman chairman, Gerry Harvey, was pleased with the performance of the overseas divisions.
“From humble beginnings, when we introduced the Harvey Norman brand to overseas markets in 1997, the Harvey Norman brand has grown to become a strong global player with solid results achieved by the 89 company-operated stores across seven countries. Retail sales in New Zealand were just under $1 billion in local currency whilst in Asia were just under half a billion for the 2018 financial year.
“We fully intend to capitalise on this excellent performance overseas and plan to invest substantially in growing our offshore Harvey Norman store network, particularly in South-East Asia,” Harvey said.
“We are actively exploring new sites and there is an expectation to open up 18 new Harvey Norman company-operated stores overseas within the next two years – which will likely be the beginning of our biggest organic growth spurt in over a decade.”