It’s double digit declines all round at Harvey Norman, franchise store sales fell 12.3% dividends are being slashed 33% and profits are down 32% as the retailer struggles in what is now being described as a “brutally tough market”.
The retailer delivered a full-year profit of $539.52 million, with overall group sales marginally weakened to $9.2 billion.
The franchising operations margin of 5.82 per cent was below an expected 8% due to heavy discounting to clear stock.
Net profit came in at $546.8 million compared to $811.5 million a year ago.
Earnings before interest, tax, depreciation, and amortisation slipped to $1.13 billion, down 21.3 per cent, from $1.43 billion in 2022 a 25.2% fall Vs 2022.
Despite the bad news Harvey Norman shares were up 1.8% at 3.00pm trading at $3.32.
During the past year, the stock has fallen 21.8% despite heavy buying by Chairman Gerry Harvey earlier this year.
It was more bad news for Harvey Norman earnings before interest, tax, depreciation, and amortisation which fell 21.3% or $1.13 billion from $1.43 billion a year ago but still not as bad as the forecasted 25.2% drop the market thought was coming.
A solid freehold property portfolio of $4.05 billion propped up the business.
The company’s balance sheet saw the portfolio cross the $4 billion milestone for the first time.
In sharp contrast, their Malaysian stores posted positive sales growth aided by new stores opening, which led to overall sales increasing to 0.6%, whereas equivalent store sales are down 5.7%.
The white goods and homewares retailer also says it will continue its Malaysian expansion plan by opening 80 stores by the end of 2028, adding to their already 30 stores.
During the last couple of years, Harvey Norman profited with strong sales and profits during the pandemic when consumers needed office supplies and furnishings for their home offices during lockdown.
Down 33% from last year’s payout, executive chairman Gerry Harvey announced a final dividend of 12¢ per share to be paid on November 13, taking the year to 25¢, less than the 37.5¢ paid in 2022 and not meeting market projections of 23.8¢.
As one of the remaining leading retailers to share its financial results, the morning trade saw share prices surge up 2% to $3.92 despite sinking profits.
