Harvey Norman’s sales and earnings rise in Australia

Despite the cost-of-living crisis, consumers are loading up on furniture, whitegoods and AI-enabled computers from Harvey Norman stores.

Harvey Norman is doing a strong trade in AI-enabled tech. Picture: Britta Campion

Harvey Norman co-founder and chairman Gerry Harvey says he believes the economy and the ­average consumer are doing better than expected, as shoppers load up on household goods and AI-enabled computers.

Mr Harvey called out the artificial intelligence revolution as driving sales for his consumer electronics departments within Harvey Norman stores as consumers become more interested in AI and its use in their daily lives.

Harvey Norman reported a lift in interim profit on Friday, although the retailer’s collection of 122 overseas stores were a drag on its performance, with New Zealand struggling and its first store in Britain ringing up a $10m loss.

The retailer remains optimistic about the potential of Harvey Norman becoming a household name among British consumers, matching similar success when it opened in Ireland and Europe.

Mr Harvey was also optimistic about the strength of the Australian economy, saying he had witnessed rising sentiment and sales for his flagship Australian Harvey Norman stores since July.

This upbeat momentum was continuing into January and February, spurred on by the RBA’s ­ recent interest rate cut, the billionaire retailer told The Australian.

“July to December was better than I thought it would be, and all the publicity out there about cost-of-living pressures and I thought it would be pretty ordinary, but it was better than I thought, and January and February it has continued and was good as well,” Mr Harvey said.

“So it is just telling you at the moment that retail sales are not as bad as what a lot of people would have predicted.

Looking at the RBA interest rate drop I thought, do they have the opinion it is a little bit worse than what it is? But when you look at it, the Australian economy is actually a little bit stronger than what people think.”

This was evident in Harvey Norman’s interim results as it reported a 39.7 per cent rise in net profit to $279.39bn, as sales across its stores that span Australia, New Zealand, Asia and Europe rose 3.86 per cent to $4.83bn.

The half-year result was broadly in line with market expectations, although excluding the $10m loss from its maiden store in Britain the result was a 2 per cent beat to consensus.

Harvey Norman chairman Gerry Harvey. Picture: Richard Dobson

Harvey Norman, which has a growing network of stores overseas, from Malaysia to Ireland, said pre-tax profit of $400.29m was up 41.2 per cent. Bolstering its performance was its long-held property portfolio, with its freehold property portfolio valued at $4.39bn at the end of the half to deliver a property segment pre-tax profit of $165.81m, up from a profit of $70.43m for the previous corresponding period.

Total assets for Harvey Norman also pushed through the $8bn level for the first time, rising to $8.25bn.

Harvey Norman lifted its interim dividend to 12c a share, up from 10c and payable on May 1.

Mr Harvey said sales growth in Australia came from across the 198 stores and in all categories – and especially computers.

“It is right across the board, but perhaps computers is a little bit better than everything else because of AI, and electrical is fine, bedding, furniture, all fine,” he said. “Computers have a bit of a kick because of AI and is a bit better than the rest of the departments.

The higher than expected dividend, earnings beat and positive sales growth for the start of the second half helped Harvey Norman shares gain more than 3 per cent to $5.25.

Harvey Norman reported that same-store sales in January rose 2.1 per cent, and further increased in February to be 7 per cent higher.

Jarden analyst Ben Gilbert said the results were broadly in line with market expectations.

“Looks like an OK result and a beat when we exclude the start-up losses associated with the UK expansion,” Mr Gilbert said.

“While January trading was OK, the acceleration into February was ahead of expectations.”