Harvey Norman profit slips as coronavirus clouds outlook

Looking at the six months through December, sales at company-owned and franchised stores grew 1.9 per cent to $4.07 billion, but comparable aggregated sales for Harvey Norman’s Australian stores were flat, missing analyst expectations of a 0.2 per cent lift.

The company pinned this drop on difficult trading conditions caused by the bushfire crisis, which led to a $23 million rise in “tactical support payments” to affected stores to help them stay open. This also led to a drop in franchise margins from 5.3 per cent to 4.19 per cent, one of the lowest levels and largest declines since 2015, it said.

Harvey Norman’s overseas operations continued to be the main driver of growth, with offshore profits rising 5.4 per cent to $81.69 million for the half. Comparable sales in locations such as Ireland, Slovenia and Malaysia all saw sizeable increases, though the company’s Singapore locations dropped sales by 4.1 per cent.

The retailer’s massive property portfolio also posted gains, with Harvey Norman’s net assets now valued at $3.28 billion, a 4.2 per cent increase on the prior corresponding half. Property accounted for $2.97 billion of assets.

“We make sure that our properties are maintained to a high-quality standard, synonymous with our reputable brand, and we ensure that the layout and floorspace can be quickly adapted to the changes in retail trends and consumer tastes,” executive chairman and founder Gerry Harvey said.

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