Harvey Norman (HVN) reported a bumper result for the year to June, sending the shares up to their highest level for more than 8-years.
The shares jumped 2.7% at the close to end the day on $5.38, but that was only after they touched an intra day high of $5.58, the highest since late 2007.
Thanks to the collapse of Dick Smith and buoyed by the home building and apartment boom, the retailer boosted sales of furniture, homewares, appliances and electronics.
As a result Harvey Norman said net profit reached $348.6 million, up 30% on 2014-15 as it joined JB Hi-Fi (JBH) in benefitting from the messy collapse of Dick Smith at the start of the year and the continuing home buying and renovation boom. The bottom line result included property revaluations of $48.4 million.
Excluding those revaluations, net profit rose 20.2% to $314.7 million, compared with market forecasts around $325 million. Impairments totalled $33 million in the year to June – mostly related to a write down of mining camp joint ventures
Profit before tax excluding write down losses was $526.3 million, up from $378.4 million in the 2015 financial year.
The company said franchisee sales grew 7.6% in the full year to $5.33 billion, a result chairman Gerry Harvey said demonstrated the operation’s strong position in the home and lifestyle market.
“Population growth has also been an important driver of new dwelling construction growth and refurbishment of existing homes," Mr Harvey said yesterday.
"Franchisees have also capitalised on the growing category of connected devices forming a substantial part of the ‘Internet of Things’" – a term used to describe the use of computer-based systems and devices embedded in everyday living.
Harvey Norman announced a fully-franked dividend of 17 cents a share making a total for the year of 30 cents, up from 20 cents.
But there was a special 145 cents a share dividend paid in respect of 2014-15, making the total 34 cents for that year. Therefore the latest full year payout is down.
In Australia, total sales rose 7.6% and same-store sales were up a very solid 8.4%, ending the year with 8.4% comparable store sales growth in the June quarter, one of the best for a mainstream retailer.
For the first time in years, Harvey Norman said its sales also rose in each of its company-owned operations overseas, including Ireland, New Zealand, Singapore and Malaysia.
Harvey Norman said increased franchise fees and a cut in franchisee support lifted profits from its franchising operations by 34% to $268 million.
The company said with the better sales, its retail businesses in Singapore and Malaysia, moved from a $6 million loss to $11 million profit in the latest year.
But despite the improved sales in the year to June, profits from its Irish and Northern Ireland chains were again scarce. The company cut its net loss to $6.6 million for 2015-16.
