Harvey Norman has beaten analyst expectations with both revenues and sales up, overseas stores did not perform as well as their local stores.
The group’s total franchisee sales for the six months to December 31 gained 5.5% to $3.34 billion, ahead of market expectations of 3.5%, same store sales growth was 5.3%
Profit before tax in its 554 Australian franchise stores reached $180 million, jumping 26%, driven by more franchise fees on the higher sales.
Total sales came in at $4.83 billion in the first half of the financial year, up from $4.64 billion 12 months ago.
Harvey Norman posted a profit of $279.39 billion, up 39.7%, in the six months to December, driven mainly by its growth in Australia.
Overall sales revenue across its markets climbed 3.86% to $4.83 billion. In Australia, its biggest market, Harvey Norman’s pre-tax profit rose 26% to $180.28 million.
The big CE, appliance and furniture retailer also reported a 4.7% year on year increase in its net assets to $4.72 billion.
Net assets have been growing at a five-year compound annual growth rate (CAGR) of 7.5%.
Harvey Norman also noted that it surpassed the $8 billion milestone for the first time, with total assets reaching $8.25 billion as at 31 December.
The company said that 66% of that asset base is comprised of “quality, tangible assets, including an appreciating freehold property portfolio valued at $4.39 billion”.
Analyst Motley Fool claimed that on the negative side of the ledger, operating cash flows declined by 9.9% from H1 FY 2024 to $448 million as the cash conversion rate fell from 135.0% to 118.8%. T
he company said this was mainly due to higher payments to its suppliers and employees from new store openings.
Harvey Norman has 122 outlets overseas and has been expanding into countries such as Malaysia and the UK where it opened its first store last year, with a second store expected to open in the West Midlands next year.
While local franchisee sales in Australia gained, sales in markets including New Zealand, the UK, Singapore and Malaysia sales are falling.
Sales for the six months to December 31 in New Zealand declined by $18.34 million, or 3.6%, to $487.87 million from $506.21 million in the same period the previous year.
In Northern Ireland, sales for the first half of FY25 increased by $1.10 million to $11.47 million, from $10.37 million year-on-year. However, Northern Ireland recorded a loss of $3.46 million for H1 2025, compared to a loss of $1.26 million for the same period in 2024.
In England, its operations resulted in a loss of $6.64 million for the H1 2025 period.
Overseas retail profitability declined by 10.9%, or $8.29 million, to $67.89 million.
“Overseas retail results were adversely affected by persistent macroeconomic headwinds in New Zealand that continue to dampen consumer and business confidence,” said Harvey Norman chairman, Gerry Harvey.
“The strategic expansion into England has come with a significant country establishment costs this period, which places us in good stead for our plans to expand our retail footprint in the UK over the coming years.”
At around noon on Friday, Harvey’s shares were trading nearly 5% over their previous closing price at $5.33. Its share price has already risen 13% since the start of the year.
Its asset base has crossed the $8 billion mark for the first time, as the retailer lifted its interim dividend to 12c per share, up from 10c.
“Our strong balance sheet, low gearing ratio and substantial cash reserves provides the flexibility and capacity to seize opportunities as they arise and secure additional liquidity when needed,” he said.
Gerry added that a strong demand for AI-enabled devices was driving sales growth. “Consumers continue to embrace the growing AI PC market, with Harvey Norman proudly enhancing its AI-foothold in the delivery of next gen AI technology range. The continuing innovation and mainstream adoption of Next-Gen AI PCs and devices are expected to further drive sales growth in Home Appliances, television, Audio, Mobile & Computer Technology categories throughout FY25 and beyond.”
