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Harvey Norman posts nearly 20 per cent increase in full-year profit

On Friday, Harvey Norman reported positive full-year results off the back of increased demand for furniture and appliances as people redecorated and upgraded their homes during lockdown.

The global furniture chain’s aggregated revenue across the Harvey Norman, Domayne and Joyce Mayne brands was A$8.23 billion, a 7.6 per cent increase on the prior corresponding period, while net profit after tax was up 19.4 per cent to A$480.5 million.

In New Zealand, Northern Ireland, Slovenia, Croatia, Malaysia and Singapore, where stores are either wholly- or majority-owned by Harvey Norman, stores were forced to close for between four and 10 weeks due to government restrictions.

New Zealand was the biggest contributor to offshore sales, where sales rose 28.1 per cent year on year to $21.8 million.

Twelve stores in Auckland were forced to shut for a second time recently, but are set to reopen today, August 31. Eighteen stores in Melbourne are still closed.

In Australia, where franchisees kept stores open during lockdown, sales rose 8.9 per cent year on year to $6.2 billion, while overseas sales rose 3.5 per cent year on year to $2.1 billion.  

The full-year results solidify the picture that began to emerge in early June, when the retailer reported its second-half results to May 31, of the economic impact of different approaches to controlling the outbreak.

Harvey Norman chairman Gerry Harvey called FY20 a year of “unique challenges”, referencing the drought and bushfires of the 2019/20 summer, as well as Covid-19.

“Pleasingly, customers continued to engage strongly with our brands and importantly, as we are in the home retail space, the customer was appreciative of the shopping experience, spaciousness and easy parking at the physical franchised complexes and stores, whilst embracing the ease of connection to our brands digitally and the important convenience of home delivery and click and collect,” he said.

The company used the increased cashflow from operating activities to pay down debt and ended FY20 with a net cash position of $15.4 million, compared to a net debt position of $626.5 million at the end of FY19.

The balance sheet was further strengthened by an 8.7 per cent increase in the value of its net assets to $3.5 billion as at June 30, 2020 and the retailer’s strong working capital position.

“[T] he consolidated entity had $685 million of unused, available financing facilities, and is therefore well-placed to respond to challenges as they arise,” Harvey said.

After cancelling the interim dividend, the board has recommended payment of a fully-franked final dividend of 18 cents per share to be paid on November 2.

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