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Harvey Norman profit down 3.6pct in FY22

Harvey Norman says its full-year profit dropped 3.6 per cent in 2021/22 as COVID lockdowns hit its franchisees, but the start of fiscal 2023 has seen “solid sales results”.

The electronics, furniture and bedding retailer announced on Wednesday it had made $811.5 million in profit after tax in the 12 months to June 30, down from $841.1m in the year prior.

Total system sales were down 1.7 per cent to $9.6 billion, down $163m from 2020/21.

“Our balance omnichannel strategy continues to deliver, 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 per cent,” Harvey Norman chairman Gerry Harvey said.

Since the end of the 2022 financial year, from July 1 to August 29, Australian same-store sales are up 10.3 per cent, and overseas sales are also up, except in Ireland and Northern Ireland.

“Low unemployment and high net deposit rates continue to underpin growth,” the company said.

Harvey Norman has 544 franchisees in Australia and 109 company-operated stores overseas and it is pushing back plans to transform some of them.

Given COVID-related supply chain issues and labour shortages, the retailer expects to complete 25 premium refits over the next five years, down from the 40 it was hoping for earlier this year.

E&P Financial analyst Phillip Kimber said overall it was a better than-expected result for the retailer.

He noted that Harvey Norman’s Australian franchising division reported a profit margin of 8.2 per cent, which is down from 9.0 per cent a year ago but compares to a average historical margin of around 4.5 per cent.

The company declared a fully franked final dividend of 17.5c per share, from 15c a year ago. Its total payout for the year is 37.5c, from 35c in 2020/21.

At 1.26pm AEST, Harvey Norman shares were 1.9 per cent lower at $4.25 on a generally down day for the market.

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