Australian franchisee sales on the decline.

Harvey Norman has reported net profit after tax of $222.77 million, up 7.3% on the previous corresponding period, for the half year ended 31 December 2018, with record offshore retail sales revenue of over $1 billion, attributed to overseas flagship stores.

Malaysia continues to be the stand out performer, with sales up 53.7% on the previous corresponding period, followed by Ireland with sales growth of 22.8%, Singapore at 13.4% and Slovenia and Croatia at 12.5%.

However, total sales from Australian Harvey Norman, Domayne and Joyce Mayne franchisees fell 1.7% during the half. The sales drop continued into 2HFY19 with a 3.2% fall in total sales for the period 1 January 2019 to 25 February 2019, on the back of the changed promotional period of Australia Day, Back to School and Lunar New Year consolidated into one week.

The retailer said the sales performance of franchisees was in line with overall moderation in the discretionary retail market in Australia for December 2018 trading period.

Harvey Norman chairman, Gerry Harvey said, “The last six months have seen outstanding results from our stores in Singapore and Malaysia, building on the growth we had already experienced in the region and really delivering in an impressive manner.

“We have found this region to be a very fertile testing-ground for taking new ideas to market, both in retail presentation and proof-of-concept. Quality performance like this further enhances our brand in the region, and provides a solid foundation for further development in the near future.

“We kicked off our flagship store concept in South-East Asia, and since that success, we have completed the roll-out of the format across all of our eight countries – with the second stage of reformatting the complexes at Auburn in Sydney and at Wairau Park in Auckland finished in late 2018. It’s been a great boost for our brand. We have learnt a lot from these experiences and I can say with confidence that it is changing the way we think about the retail experience we are providing.”