Have Harvey Norman Franchisees Screwed Both The Feds & Landlords After Record Result
Harvey Norman franchisee sales have boomed increasing to $3.76 billion for the half-year ended 31 December 2020, an increase of $805.09 million, or 27.3%, from $2.95 billion in the previous half-year ended 31 December 2019.
Now questions are being asked as to whether the franchisees will return their “reduced” rent fees which they were given when it looked like retailers would struggle due to COVID-19.
It’s also not been disclosed how much in JobKeeper payments or reduced rent the Harvey Norman franchisees got during the period which has delivered record profits and bonuses for the Harvey Norman franchisees but it is believed to be in the tens of millions.
Harvey Norman said that the higher franchisee sales which represented a 210%, increase to $383.96 million was up from $123.86 million for 1H20.
This has resulted in a franchising margin of 10.22% for 1H21, an increase of 603 basis points, from the 4.19% franchising operations margin reported in 1H20.
Management claimed that the proﬁtability of the franchising operations has been improved by a reduction in operating expenses.
Borrowing costs for the franchising operations also decreased.
Harvey Norman has admitted that the increase in profits and the decrease in operating costs was offset by a reduction in rental income received from franchisees for leased franchised complexes, due to the rental support and assistance granted by the franchisor to those franchisees affected by the 11-week COVID-19 mandatory store closures in greater Melbourne, Victoria.
What’s not been said is whether the franchisees will pay back the reduced rent due to the increased profits and sales and whether they will return JobKeeper payments.
Aggregated franchisee sales revenue was $3.76 billion for the half-year ended 31 December 2020, an increase of $805.09 million or 27.3%, from $2.95 billion in the previous half-year ended 31 December 2019.
Approximately 65% of the franchised complexes are located in regional standalone large-format centres.
Overall the Harvey Norman group has reported a record result from trading during COVID-19 restriction, profit before tax was up 113% sales increased.
Total Company-Operated and Franchisee Sales Revenue rose 25.8% to $5.12bn.
Profit before tax was $643.91 million, an increase of 113.8% from $301.15 million in the previous half year.
Harvey Norman Chairman, Gerry Harvey said “The solid results delivered this half is a testament to the strength.