Both profits and revenues are down at Harvey Norman with the business failing to reveal what impact the crash of their web site on Australia’s biggest trading day Black Friday, had on the business in the last quarter, they did announce the opening of a store in the UK.
Adjusted profits (excluding property revaluations) slid 29.5% to $126.9 million for the half year to December 2023.
Revenue for the period fell to $2.15 billion in 1H24 compared to $2.34 billion in 1H23, this was a drop of $191.84 million or -8.2%.
Franchisee sales revenue also to $3.16 billion in 1H24, Vs. $3.51 billion in 1H23.
Ironically, the front cover of their half yearly report contains a multi coloured picture of the LG Bespoke range after the Samsung Bespoke range was dumped from their stores with the exception of a black and white model.
The franchisee network also failed to deliver revenue for the Group with fees back to Harvey Norman falling by $102.51 million to $402.82 million margins from franchising fell to 4.52%.
Also impacting the business who have been rampantly discounting products to drive traffic is an increase in their operating expenses this climbed to 18.4% for 1H24 compared to 16.4% in 1H23 this was a drop of a 226 basis points drop.
compared to a margin of 6.78% reported in 1H23.
HN management claimed that “Profitability of the franchising operations segment was negatively impacted by a reduction in franchising revenues to $83.27 million this was down 14.0%, from $595.08 million in 1H23
During the period Harvey Norman who control the franchisee network lifted rents for franchisee operators by 5.7%.
The increase in total operating expenses came in at $40.21 million due in part to inflation.
Occupancy expenses also increased by $23.23 million or 16.2% to $166.44 million in 1H24 due to new store openings.
Reported profit after tax was $200.01 million for 1H24, a decrease of $165.89 million or –45.3% from $365.90 million in 1H23.
In New Zealand where JB Hi Fi is gaining ground and sales away from Harvey Norman sales declined by 6.1% to NZ$35.75 million.
The retailer has also cut its dividend, although its net asset base managed to help it grow its assets desapite the impact of inflation issues.
Management is also eyeing off further international expansion and will open a store in England later this year, complementing its existing stores in Ireland, and it has also committed to growing its offshore network and will target to grow its Malaysian store numbers to 80 by the end of 2028.
The Companies Australian freehold investment property portfolio is now worth $3.51 billion as at 31 December 2023.
This is up by $71.21 million or2.1% during 1H24. Management claim that the increase is due to capital additions and refurbishments made to stores during the current period.
Despite the poor result Harvey Norman shares took off in early trading today, with the share up 3.48 % at 11.30am.
