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Harvey Norman profit up

Harvey NormanHarvey Norman’s net profit after tax improved 26.6 per cent to $268.1 million on the back of Australia’s strong property market and increased profitability from franchise operations.

Excluding property revaluations, annual net profit was up 19 per cent to $261.84 million, from $220.1 million.

Global sales of $6.02 billion were up 4.6 per cent on a like for like basis compared to the year before.

Franchisee operations became more profitable due to an increase in franchise fees and a decrease in tactical support provided to franchisees.

Headline Australian franchisee sales revenue increased 3.7 per cent to $4.95 billion for the full year ended June 30.

The company said that from July 1, 2015, to August 27, 2015 sales from franchisee stores were up 5.5 per cent, with like for like sales up 6.6 per cent on the prior corresponding period.

“Strong growth in franchisee sales has enabled us to further reduce tactical support to franchisees. While maintaining our investment in the Harvey Norman brand, tactical support has decreased by approximately 20 per cent in each of the last two years,” said Harvey Norman chairman, Gerry Harvey.  

“In what is still a generally challenging retail environment, we have seen further improvement in the performance of each of our business segments.

“Continuing investment in our omnichannel strategy to deliver an ever more seamless, more integrated and more differentiated Harvey Norman customer experience is paying dividends.”

Company-owned stores lifted profit before tax by 42.9 per cent to $41.03 million.

In Australia two Harvey Norman stores and three Joyce Mayne complexes were closed. One Harvey Norman complex was opened and one Joyce Mayne store was rebranded as Domayne during the period.

Continuing strength in the Australia property market, particularly new home construction and secondary market transaction levels, are expected to support Harvey Norman’s medium term performance.

Operations in New Zealand outperformed in a competitive market.

Increased brand recognition and improved economic conditions resulted in a 40 per cent drop in trading losses in Ireland and Northern Ireland.

This was partially offset by operations in Asia, where an erosion of gross margins and higher costs associated with new store openings resulted in a fall in profitability.

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