Harvey Norman enjoys pandemic sales bonanza

Working from home and lockdown spending help retailer Harvey Norman more than double pre-tax profit over four months.

Staff at a Harvey Norman store in Cairns. Picture: Stewart McLean

Harvey Norman chairman Gerry Harvey believes the retailer is in the midst of “near boom conditions” after its earnings more than doubled between July and November, with Australians returning from overseas cashed up and looking to spend on housing and products to fill them.

However, Mr Harvey said the pace of profit and sales growth for the furniture, whitegoods and consumer electronics retailer rung up since the start of fiscal 2021 would likely lessen as consumers revert to more normal shopping behaviours in the face of a fading COVID-19 pandemic.

“In new territory”. Gerry Harvey. Picture: NCA NewsWire

“It can’t keep going at the rate it is going, that is obvious, but there’s an opinion that we are going to be in a period of nearly boom conditions in the next two or three years and if that’s the case then business will go very well,” Mr Harvey told The Australian after the company’s annual general meeting on Wednesday.

“But then there is also a body of opinion that it will all come to a great big screeching halt and what’s going to happen then?

“I’m more optimistic than at any stage in the last eight to nine months because in March, April I was thinking are we getting into a Great Depression and it ended up being nothing like that — it ended up being a great boom.”

Before the AGM Harvey Norman released a trading update that highlighted how the rush for furnishings, whitegoods and housewares as consumers prepared for extended lockdowns put a rocket under the retailer’s sales.

Harvey Norman said pre-tax profit more than doubled between July 1 and October 31, hitting $341.11m for the four months against $131.17m for the same time last year, despite the impact of lockdowns in key markets including Victoria and New Zealand’s Auckland region. Aggregated revenue rose by 28.2 per cent between July 1 and November 21, while comparable sales for the same period increased by 27.5 per cent.

At its flagship Australian business total sales between July and November rose 29.7 per cent, while like-for-like sales lifted 30.4 per cent.

Mr Harvey said despite a halt to immigration which would put a lid on population growth, he was confident that housing values would rise and expats returning home would help fuel demand for Harvey Norman products.

“It will be offset by so many Australians coming back here now and a lot of those ones coming back have quite a lot of money and they are buying a lot of things and probably contributing to some degree to the rise in housing prices.

“It doesn’t look like the economy is going to be anything other than very strong into the immediate future,” Mr Harvey said.

At the AGM Harvey Norman chief executive Katie Page said the strong momentum in purchases for home products was also being witnessed in its overseas stores.

“As we sit here today with borders coming down today and next week between NSW, Queensland and Victoria, and as Australia opens up even more, we are very confident especially for the next three months— end of November, December and January — and then that back to school period will continue to be a good time for our company.”