Harvey Norman looks overseas as profits drop

Harvey Norman saw net profit after tax fall 16.4 per cent to $375.38 million in FY18, compared to $448.98 million in the previous fiscal year.

Despite this, the company delivered its second highest underlying profit before tax in the company’s history of $532.54 million, alongside an 8.8 per cent increase on sales revenue to $1.99 billion, up from $1.83 billion in FY17.

The result was negatively impacted by two main factors: a reduction in the net property revaluation increment for the property portfolio from $108 million in 2017 to $51.65 million, and a loss of $49.44 million in respect to the Coomboona Holdings dairy joint venture.

“The Harvey Norman brand has grown to become a strong global player with solid results achieved by the 89 company-operated stores across seven countries,” Harvey Norman chairman Gerry Harvey said.

“We fully intend to capitalise on this excellent performance overseas, and plan to invest substantially in growing our offshore Harvey Norman store network, particularly in South East Asia,” Harvey said.

Retail sales in New Zealand were just under $1 billion in local currency, while sales in Asia were just under $500 million for the 2018 financial year.

The company’s overseas company-operated retail locations increased profitability by 15.1 per cent to $116.13 million in FY18, from $100.86 million in FY17.

The chairman went on to note the company is actively exploring new sites, and expects to open 18 new Harvey Norman company-operated stores overseas within the next two years, bringing the total store number to 107 by 2020.

The company’s evolving flagship strategy will see one flagship store in each of the eight countries in which the company, or its franchisees, operate.

Harvey Norman aims to offer tactile, interactive shopping in its flagship stores, providing an experience that cannot be replicated online.

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