Pandemic Profit Surge Persists At Harvey Norman

The early months of 2020-21 have seen earnings for Harvey Norman continue their strength from the final quarters of 2019-20 as the ripples of the surge in consumer spending in the COVID-lockdowns continues.

In a trading update yesterday issued before its AGM, Harvey Norman said unaudited pre-tax profit rose a massive 160% to $341.1 million for the four months of the year (to October 31).

Harvey Norman said this figure is before the net impact of AASB 16 Leases change and net property revaluation adjustments.

This compares to $131.17 million in the same period of 2019-20.

The rise continues a stellar run for the retailer, which reported a 19.4% jump in net profit at its full-year result, thanks to the surge in sales, profits, and margins in the final five months of the June 30 year.

Group sales revenue increased by 28.2% between July 1 and November 21 compared to the same period of 2019-20.

The company said the strong sales performance was led by its Australia and New Zealand businesses.

Harvey Norman’s Australian franchisees lifted comparable store sales 30.4% in the period while its New Zealand stores reported a 20.4% lift in comparable-store sales. This includes stores that were temporarily closed due to COVID-19.

A total of 18 stores were closed in greater Melbourne from August 6 to October 27 due to lengthy lockdown. These stores quickly moved to a click & collect and contactless delivery model to limit the sales impact.

A further 10 stores were closed in South Australia for a 3-day period last week in order to prevent a new COVID-19 wave in the state. These stores have now reopened as normal.

Harvey Norman again made it clear the update was not to be taken seriously as a future indicator of sales and earnings performance for the interim or full years.

“This disclosure is not intended to constitute earnings guidance. The Company does not provide earnings guidance. The COVID-19 pandemic has caused, and continues to cause, great uncertainty about the future economy,” the company said in the statement to the ASX.

Harvey Norman shares fell 2.5% to $4.58.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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