Harvey Norman has reported a net profit of $365.9 million for the six months to December, down 15.1% from the prior corresponding period; although, compared to the first half of FY20, profit was up 71.3%.

In Australia, profit before tax for the franchising operations segment was down 18.9% year-on-year to $237.65 million. However, the result was well-above pre-pandemic levels, growing 91.9% compared to first half FY20.

Total franchisee aggregated sales revenue was up 2.1% to $3.51 billion during the half, with comparable sales increasing 1.9% to $3.5 billion, attributed to a substantial decrease in sales of seasonal products such as air conditioning, fans, air treatment, barbeques and outdoor furniture, due to cooler than usual temperatures. When compared to the first half in FY20, franchisee sales grew 18.7%.

In January 2023, total aggregated sales for Australian franchisees dropped 10.2% compared to January 2022 with comparable sales down 10.4%.

“People think it is a bad result, but I think it’s pretty good,” Harvey Norman chairman, Gerry Harvey told Appliance Retailer.

“The results are not too bad when you consider going back to 2019 to 2022 and you would expect 2023 would drop off a bit but business is still strong compared to two or three years ago. We are sitting where I thought we would be. All things considered we still made a pretty good profit. I don’t look at this as a drop, because it came off a high drop which you can’t count and are not comparing like for like.”

Overall, Harvey remains confident about the retail sector. “Online retailers are not doing well but all major shops seem to be doing ok. I have not heard otherwise apart from department stores which are a separate thing altogether.”

Overseas retail profitability was down 22.5% to $99.6 million, primarily due to difficult trading conditions in New Zealand. When compared to the first half FY20, profit before tax for the overseas retail segment result exceeded pre-pandemic levels by 21.9%.

Harvey said overseas business is good with the exception of New Zealand. “You have years where some countries drop off. When you are in eight countries you have a bit of insurance when one might be doing well and another not so well.

“We are opening new stores here and have ear marked 40 to 50 new stores for Malaysia which will be in addition to the 30 there now.”

In Australia, the premium refit program has recommenced with an expectation to complete up to 25 refits over the next five years. During the first half of FY23, the premium refit of the furniture and bedding categories of the Fyshwick (ACT) franchised complex was completed and the premium refits of Balgowlah (NSW), Erina (NSW) and Preston (VIC) franchised complexes are currently underway.

During the half, one franchised complex opened in Australia located at Manjimup (QLD) in November 2022. In the second half, the company intends to open an additional franchised complex in Australia and relocate one franchised complex from a leased site to a freehold property.