Harvey Norman books record first-half result after gangbuster nest-sprucing sales

Harvey Norman has been a massive beneficiary of the ongoing, pandemic-induced home sprucing trend, and another thing bodes well for its future.

Retailer Harvey Norman has achieved record financial results, more than doubling its first-half net profit, with chairman Gerry Harvey partly crediting the franchise’s success during the pandemic to spaciousness in stores and easy parking.

The franchise flagged the bumper result in September when it noticed sales had gone gangbusters and on Friday confirmed a net profit for the six months to December 31 of $462m, up more than 116 per cent on the previous half-year result.

“The customer was appreciative of the shopping experience, spaciousness and easy parking at the physical franchised complexes and stores whilst embracing the ease of connection to our brands digitally and the important convenience of home delivery and contactless click and collect,” Mr Harvey said.

Gerry Harvey, the chain’s biggest shareholder with a 31.5 per cent stake, has millions of reasons to smile.

Remarkably, Harvey Norman has also extinguished its debt.

Net debt was $553.23m at the end of 2019 but had turned into a near $22m net cash position by the end of last year.

On top of that, the chain has almost $500m in unused, available financing facilities, giving it the ability to capitalise on opportunities.

Mr Harvey revealed to NCA NewsWire last year that the winning strategy had been to contact suppliers and buy orders cancelled by other retailers as they closed their doors, stockpiling a massive inventory in a move he described as “a calculated gamble”.

Furniture sales remain strong as home sprucing continues. Picture: Stewart McLean

The company said robust sales in whitegoods, televisions, home office furnishings and small appliances continued, while ongoing remote working kept computers and related peripherals sales strong.

Harvey Norman said the trend of transforming backyards into outdoor entertaining spaces also continued, with sales of outdoor furniture and outdoor cooking products remaining solid, while bedding and indoor furniture was also selling well as Australians spruced up their interiors.

Towards the end of 2020, the launch of PS5 and Xbox Series X consoles boosted the gaming category.

The franchise said positive momentum continued into the second half, with aggregated sales revenue up 21 per cent, driven by stores in Ireland, Australia and New Zealand.

The release of the PlayStation 5 and Xbox Series X were hotly anticipated by gamers. Picture: Brendan Radke

Noting the strong uptake of HomeBuilder grants - triple the federal government’s initial expectations - Harvey Norman said the surge in new dwellings and major renovations could “open new opportunities and drive sales throughout 2021 and beyond”.

“The focus will be on the strength of the trading update for January and February, which does not yet show a material slowdown in momentum,” Citi said.

The company declared a fully franked interim dividend of 20 cents per share after cancelling the previous mid-year payout to shareholders in April as the pandemic took hold.

The company expects strong uptake of HomeBuilder grants will fuel more sales.Picture: Nigel Hallett

Citi said the dividend was ahead of consensus expectations of 17 cents per share but below its estimate of 30 cents per share, while “market expectations for a capital return were building”.

The financial services multinational wasn’t the only one saying Harvey Norman could afford to give more back, with Labor MP Andrew Leigh reiterating its call for the franchise to return millions in JobKeeper payments.

“They don’t need a cent of it” Mr Leigh said.

“Taxpayers shouldn’t be supporting a billionaire.”

Harvey Norman says all of the money was passed on directly to employees in order to retain them.

Originally published as Harvey Norman books record first-half result after gangbuster nest-sprucing sales