Harvey Norman profits up

Harvey Norman has seen sales and profits rise against a backdrop of "modest" spending growth.

The retailer posted a 36 percent rise in net profit after tax to $111.4 million, while its global revenues were up 3.6 percent to nearly $3 billion for the half year. The result includes a net property revaluation decrement, which when excluded brings the net profit after tax to $117.45 million, a 3.6 percent increase on the previous corresponding period.

Harvey Norman chairman Gerry Harvey said: "We achieved a strong increase in profit in an environment where consumer spending growth was modest."

He said this shows that the group's "omni-channel" strategy was bearing fruit.

According to the company's presentation to investors, "Our omnichannel strategy continues to strengthen with further integration between stores and online. The increased product range online supported by live chat capability and a click-and-collect service from stores throughout Australia and New Zealand is driving digital revenue growth both in store and online."

The number of Harvey Norman franchises was down but their profitability was up.

According to its statement, the number of franchised outlets in Australia dropped by nine compared with the corresponding period last year and the number of franchisees fell by 13. The number of company owned stores increased by four.

However, the franchise component of the business actually grew its revenues by 1.4 percent. Company-owned stores, meanwhile, grew at a healthy 14.8 percent clip.

"Our franchising operations segment recorded improved profitability while Australian franchise sales showed strong momentum improving on gains recorded in the September quarter to increase 1.7 percent on a headline basis and 3.6 percent on a like for like basis in the December quarter. That's a pleasing set of numbers for the important Christmas trading period," said Harvey.

"We continue to outperform a number of our competitors in the New Zealand market while our business in Ireland and Northern Ireland benefitted from loss-reduction measures and growing brand recognition, together with early signs of stabilisation in the Irish economy. This was somewhat offset by our performance in Asia, where the implementation of a new information technology system in Singapore and Malaysia."