Harvey Norman founder Gerry Harvey has labelled the past financial year as one of the best he's seen in over 60 years of retailing, as the electronics and furniture retailer delivered record sales and profit figures.
The $5.3 billion company on Friday reported a 7.6 per cent rise in total revenue to $8.23 billion for the year to June 30 and a 19.4 per cent jump in net profit to $480.5 million, which Mr Harvey said was a "shock".
"It's an enormous result, and in all the time I've been in retail...I've never been in a time like this," the 80-year-old businessman said.
Harvey norman founder and executive chairman Gerry Harvey says he's never seen times like these.Credit:Janie Barrett
"To get [comparable] increases in the magnitude of 30 to 40 per cent...it's never happened before. For me, it's an awakening, especially as we went into it thinking we had big problems, but it ended up being the greatest bonus of all time."
Harvey Norman has been one of the large retailers that have thrived through the coronavirus pandemic as it benefited from shoppers decking out their home offices and even buying chest freezers to store food supplies in. Shares jumped 2.5 per cent to a six month high at market open but failed to hold their ground, ending the session 1.6 per cent weaker at $4.24.
Earnings before interest, tax, depreciation and amortisation came in at $944 million, a 37.2 per cent jump and well ahead of analyst forecasts of $826 million. Consolidated revenue, which excludes sales made by franchisees, was $3.55 billion.
Harvey Norman has posted a record full-year result.Credit:Not-for-Syndication
Online sales have boomed during the pandemic across the retail sector, with some companies reporting a doubling in digital trade. However, Harvey Norman did not break out its online sales growth, with Mr Harvey maintaining his longstanding indifference towards the channel.
The businessman said he still viewed aspects of e-commerce as a "con", specifically claims that digital sales could overtake bricks and mortar, and noted he intentionally did not promote his online channels "because it doesn't make me any money".
"People get out there and talk about how [online is] going to take over all the sales, and it's going to be 70 per cent of refrigerator sales or something, and I said that's a con, and I still maintain its a con," he said.
However, online sales did help sales at Harvey Norman stores that were forced to close, he said, but sales swung back to being 90 per cent in-store following their re-opening, proving "beyond any shadow of a doubt" that physical sales were still dominating.
"We're just as good in the online space as anyone else. People say to me, 'go out and promote that' ... but I don't want to promote people to buy online off me because it's not as profitable," Mr Harvey said.
"I've only got one way to go, and that's wherever the market takes me. But if you give me a preference if I'd rather have 10 per cent or 30 per cent [online sales], I'd rather have 10 because I won't make as much money."
Strong sales have continued into the new financial year, climbing 38.4 per cent on a comparable basis in Australia despite 18 stores being closed in Victoria, but Mr Harvey remained resolute that he had no idea what the next 12 months would hold.
"I've been asking lots of people who I think might have some idea, but none of them do," he said.
The retailer's results were partially weighed down by some weaker results from its international divisions, as sales in Northern Ireland dropped 6 per cent on a comparable basis, and fell 14.7 per cent in Singapore, largely due to COVID-related government shutdowns. The company now plans to open just 12 new stores overseas this financial year, down from 21.
Collectively, the company claimed about $43 million in wage subsidies and rent abatements, both locally and internationally. Harvey Norman declared a final dividend of 18 cents per share, worth a total of $225 million, payable November 2.
Harvey Norman's assets, primarily its extensive property portfolio, increased in value by 8.7 per cent to $3.48 billion. The company also wiped off around $600 million in debt for the financial year, with net cash of $15.3 million at June 30, compared to net debt of $626.4 million last year.
Citi analyst Bryan Raymond said the result was above expectations and Harvey Norman's margins across the second half of the financial year had been the strongest since 2003, putting the company in a good spot for the next 12 months.
"Harvey Norman is continuing to benefit from superannuation withdrawal, wage subsidies and strong tailwinds around housing as spending is constrained outside of retail," he said.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
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