Harvey Norman’s Franchise Profit Sheds $21.92 Million
Harvey Norman revenues have dropped 7%, their property value by 44.5% while profits have fallen 4.1%.
The poor half year result ending 31 December was in stark comparison to JB Hi Fi who reported an 8% lift in profits and an increase in revenue of 5.1%.
Harvey Norman reported a net profit of $213.59 million for the six months to December 31, with its overseas ventures outperforming local operations.
Revenue from local franchisees, which include the Domayne and Joyce Mayne stores, was down 4.2 per cent to $497.84 million.
Sales from wholly owned company-operated stores in New Zealand, Slovenia, Croatia, Ireland and Northern Ireland, majority-owned controlled
company-operated stores in Singapore and Malaysia, and from independent Harvey Norman Domayne and Joyce Mayne branded franchised stores totalled $4.07 billion for the six (6) months ended 31
December 2019 this was up 1.6 percent.
‘Growth in aggregated franchisee sales revenue has moderated in HY20, within a challenging economic environment that has been influenced by a cautious consumer, changing promotional cycles and unforeseen, unprecedented natural disasters,’ Harvey Norman’s report said.
‘Understandably, the ongoing bushfire crisis in Australia has had an adverse effect on our franchisees throughout the peak December trading period.’
But the retail giant did capitalised in other areas, with an increase in EBITDIA to $60.06 million, up 15.7 per cent, with EBIT also increasing to $1.78 million, up 0.5 per cent.
In Australia, Harvey Norman has 544 franchises and 194 franchise complexes, with an additional 95 offshore Harvey Norman company-operated stores.
The decline in figures come at a time where retail is increasingly more difficult with the additional pressure of the coronavirus and its impacts on supply chains and consumer confidence. This is an unfortunate addition to the already devastating bush fire crisis that impacted consumers over the peak holiday consumer period.
Revenue received from franchises also experienced a fall in profit, with a total loss of $21.92 million (or 4.2 per cent) to $497.84 million from $519.76 million. Revenue and other income items received $106.2 million, down $7.98 million (7 per cent) from $114 million.
Harvey Norman’s net assets brings in $3.3 billion – up $132.53 million, a 4.2 per cent increase from the year prior. In addition, company-operated sales revenue saw an increase in profit to $124 billion, up $63.84 million (5.4 per cent), from $1.18 billion.
Basic earnings per share experienced a slump, valuing at 17.70 cents down from 19.12 cents from December 2018.
Harvey Norman share price now rests on 3.79 AUD, down 12.27 per cent.