Harvey Norman rings the tills

Retailer Harvey Norman will deliver a 20 per cent leap in pre-tax profits for fiscal 2020.

Furniture, consumer electronics, bedding and whitegoods retailer Harvey Norman will deliver a 20 per cent leap in pre-tax profits for fiscal 2020 as the business enjoys boomtime conditions as consumers stripping the shelves of key items.

But co-founder and chairman Gerry Harvey warned some industries were in a recession while other sectors of the economy were experiencing much rosier conditions.

Harvey Norman issued the profit upgrade on Tuesday to the ASX and it followed a recent sales update that said stores were witnessing a rush for key categories such as freezers and kitchen appliances, as households bunkered down for home isolation caused by the coronavirus pandemic.

In a brief statement to the ASX, Harvey Norman said unaudited preliminary accounts for the period July 1, 2019, to May 31, 2020, indicated profit before tax for the consolidated entity, would be about 20 per cent higher than in the previous corresponding period. In 2019 Harvey Norman reported consolidated profit before tax of $574.56m.

Harvey Norman will be reporting its full year results on August 28.

Mr Harvey told The Australian that profits were being driven by its overseas operations as well as its flagship Australian stores with a number of key categories in 2020 generating robust returns.

“It started off with freezers and then it went to whitegoods and computers, then to televisions and then to furniture to bedding — now its strong right across the board. It has been a progressive thing and not something we have ever seen before,’’ Mr Harvey said.

“We are in new territory, we have never been here before. It is a recession if you are in certain industries, but anything but a recession if you are in others.

“If you are in restaurants and pubs, Flight Centre, airlines, that sort of thing it doesn‘t matter how good you are, you have been bashed.

“But if you are in the things like we are in such as electronics, furniture, hardware or food, retailers in those categories have all been very strong.’’

Earlier this month Harvey Norman reported bumper sales for its stores since March and also partially reinstated its interim dividend from the half-year results which were initially cancelled due to growing concerns about the health crisis and a desire by Harvey Norman to maintain its cash holdings in expectations of a downturn.

Two weeks ago Harvey Norman reported sales growth of 17.5 per cent for its Australian stores in the second half. It also announced a special dividend of 6c per share to be paid at the end of June. News of the dividend followed its April decision to cancel a ­planned interim payout of 12c per share.

Harvey Norman’s flagship Australian stores recorded first-half sales growth of 0.1 per cent, rocketing to 17.5 per cent for the second half to date. For the full financial year to date sales for its Australian franchise stores were up 7.4 per cent.

Harvey Norman said government decrees saw many stores across its network in New Zealand, Malaysia, Singapore, Ireland, Northern Ireland and Europe close between March and April.