In contrast to the solid 2021-22 results from rival JB Hi-Fi earlier this month, Harvey Norman (ASX:HVN) revealed on the final day of the reporting season that it suffered a small dip in sales and earnings for the year to June 30.
HVN said it saw a 3.6% fall in net profit for the year to $811 million.
Reported EBITDA fell 1.4% to $1.4 billion on sales down 1.7% to $9.558 billion (a lot of that figure were sales via its franchise system, so not strictly comparable to JBH’s performance through wholly-owned outlets).
JB Hi-Fi had previously announced a 7% plus jump in net profit to $545 million on a 3.5% rise in sales revenue to $9.23 billion.
Harvey Norman’s EBIT fell $105.95 billion or 10.0% to $953.2 million from $1.059 billion in the 2021-22 year, excluding accounting for leases and property revaluations. Including those, EBIT was $1.193 billion, down 3.3% from the year before.
Net profit after tax and excluding property revaluations and the lease accounting fell 10% to $673.55 million from $748.77 million a year earlier.
Harvey Norman said total sales revenue of $9.558 billion was made up of franchisee sales of $6.70 billion and company operated store sales of $2.870 billion.
Despite the weakish results, the company lifted total dividend to 37.5 cents a share from 35 cents with a final of 17.5 cents a share, up from 15 cents a share a year ago.
The shares ended down 2.3% at $4.23.
Chairman Gerry Harvey said in the release that “our balance sheet is strong, our cash reserves are solid and we continue to maintain a low net debt to equity ratio of 10.31%. With experienced management, we have grown our integrated retail, franchise, property and digital business across eight countries to nearly $10 billion in system sales.”
“Our company-operated overseas retail stores result comprises 25% of total PBT excluding net property revaluations. 24% of our total asset base is located overseas, and their solid cash reserves and ample inventory levels provides a robust working capital resource to continue to grow the businesses organically and take advantage of expansion opportunities within each country or in neighbouring regions.”
Harvey and wife and company, CEO, Katie Page told shareholders in a letter that the company’s profits had been significantly affected by government mandated lockdowns in the first half of the year.
“Franchisees are well-placed to benefit from any unwind in the built-up household savings as they predominantly service the middle-to-upper product markets, and are expected to benefit from the sustained investment in the home as devices and appliances require replacement and upgrade.”
Figures for the first two months of the new 2023 financial year show Australian sales are up by 10.7% compared with last year, with comparable sales growth of 10.3% – Year ago sales were depressed by lockdowns in some markets.
Sales are up 5% overall in New Zealand, but are down by 1% in Ireland and 10.2% in the company’s Northern Ireland stores.
“The start of FY23 has seen solid sales results. Low unemployment and high net deposit rates continue to underpin growth,” the company told the market.