Irish stores ‘key’ to Harvey Norman’s record profit increase

A multimillion euro reduction in trading losses at its stores in the Republic and Northern Ireland was a "key contributor" to a record increase in profits for Australian retailer Harvey Norman.

The group said net profit jumped 29 per cent, driven by overseas sales growth and higher property values. The figure beat forecasts but shares fell 7,5 per cent after it slashed its dividend from 17 Australian cents per share to 12 cents.

In its full-year results for the year to June 30th, the company recorded profit after tax of A$448.98 million (€378.97 million). This figure is up A$100.37 million from the previous year.

Harvey Norman said it achieved a €4.14 million reduction in trading losses in Ireland. There was, however, an A$11.9 million decrease in sales revenue as the value of both the euro and sterling fell against the Australian dollar.

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In the Republic, sales increased by almost half a million euro due to “solid brand recognition and market leadership in key categories”.

In Northern Ireland, a £2.2 million rise in sales was due to the “successful first full-year trading” of its flagship store on Boucher Road, south Belfast.

The company said it would “continue to invest in the flagship strategy”, with the opening of six new stores in 2018, including one in the Republic.

History

Excluding net property revaluation increments, profit before income tax was A$531.76 million – an increase of 19.4 per cent from A$445.41 million the previous year, which the company said represented “the best results yet” in its history.

“There are a number of standouts in this net profit before tax result,” it said. “A A$17.74 million, or 24.3 per cent, increase in the company-operated retail segment shows strong improvements in the results of retail operations in New Zealand, Singapore, Malaysia, Ireland, Slovenia and Croatia.

“Likewise, a $36.38 million or 13.6 per cent increase in the profitability of the franchising operations segment has led to a result of A$304.53 million. A net property revaluation increment of A$108.05 million has delivered an increase of $59.69 million over the net property revaluation increment of A$48.36 million recognised in the previous year.”

Review

The board said shareholders would receive a fully-franked dividend of 12 cents per share. The company is also to undertake a review of its capital management options, including a possible share buy-back, as well as investment options for its core business.

Harvey Norman chairman Gerry Harvey said: "This is a record-breaking result that once again demonstrates the strength of our integrated retail, franchise, property and digital business spanning eight countries.

“The success of our flagship strategy is clearly evident in these results. Each of our flagship stores overseas are designed to provide an unrivalled customer experience in terms of store design, customer service and premium product offering.”