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Property boom buoys Harvey Norman; 30 per cent jump in earnings
Topic Started: 22 Sep 2016, 09:20 PM (1,873 Views)
Bardon
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Property boom buoys Harvey Norman


Retailer Harvey Norman has seen its shares soar to their highest price since the global financial crisis, after reporting a 30 per cent jump in earnings which outstripped market expectations.

The strong result came as strength in the property market raised demand for whitegoods and home appliances.

The group (HVN) booked a net profit of $348.6 million for the year to June 30, a 30 per cent boost on fiscal 2015 as franchisee sales grew 7.6 per cent to $5.33 billion.

The record reading topped market forecasts for earnings of $323.5m.

The news helped drive the company’s share price as high as $5.58 in the wake of the result, its strongest since February 2008. In mid-afternoon trade, the shares were up 3.4 per cent at $5.42.

Harvey Norman founder and chairman Gerry Harvey tagged the result as “outstanding”, as franchisee sales growth came in at double the rate of the prior year.

“Franchisee sales growth remains strong in the home and lifestyle market, underpinned by a resilient residential property market,” he said.

The positive benefits flowing from strength in the property sector were not expected to fade in the near-term, he added.

“Housing market conditions have been robust, responding positively to the reduction in interest rates in recent years,” Mr Harvey said.

“The number of newly-approved dwellings has been above completions for some time which suggests a continuation of solid housing activity, particularly in New South Wales and Victoria.”

Harvey Norman said fiscal 2017 had started in a similarly strong vein to the prior financial year, with franchisee sales revenue up 6.4 per cent from July 1 to August 28.

The retailer declared a final dividend of 17c a share, above market expectations for 11.5c a share.

Mr Harvey said the retailer was now generating some of its strongest sales in a decade.

“Yes, these are some of the best results we have seen since the GFC, if you look at where we were a few years ago, just before the GFC we were really powering along, and then we hit some really bad times — all the things that happened in Ireland that knocked the shit out of us,’’ Mr Harvey told The Australian.

“Now we have got Ireland back on track after many years, we have stuck in there and have just bought a property there and opening a big new store, and so our Asian business has had a good turnaround this year and we expect that to go better again.”

Mr Harvey said the housing boom and rising property prices were helping, but that consistent increases in Australia’s population were also a key factor behind the company’s results.

“I think the commentators place a very large store on that (housing boom), I think it’s important but I don’t think it’s as important as they do. I think the fact Australia’s population increases by a million every three and a bit years is much more important because that’s another million people we are servicing three and half years from now.

“And let’s say they already have got a house, or stop building houses, then they start renovating houses.’’

http://www.theaustralian.com.au/business/companies/property-boom-buoys-harvey-norman/news-story/e6949773748fc26a3904ee6805342d7c
Edited by Bardon, 22 Sep 2016, 09:21 PM.
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John Frum
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Bardon
22 Sep 2016, 09:20 PM

The strong result came as strength in the property market raised demand for whitegoods and home appliances.

Housing Bubble.

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Mr Harvey said the housing boom and rising property prices were helping, but that consistent increases in Australia’s population were also a key factor behind the company’s results.

Population ponzi bubble.
Edited by John Frum, 22 Sep 2016, 11:01 PM.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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Jon Snow
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Hard to believe these guys are still in business at all.

Crap range,crap locations, crap store layout, crap prices, non-existent service.

Why the f*** anyone shops there at all is beyond me. Maybe the oldies like the parking.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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John Frum
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Jon Snow
22 Sep 2016, 11:09 PM
Hard to believe these guys are still in business at all.

Crap range,crap locations, crap store layout, crap prices, non-existent service.

Why the f*** anyone shops there at all is beyond me. Maybe the oldies like the parking.
Clueless frogs still wading in the simmering water.

Shop till you pop.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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herbie
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John Frum
22 Sep 2016, 11:14 PM
Clueless frogs still wading in the simmering water.

Shop till you pop.
Frummy ya back! All me hope has returned ... :)
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Jon Snow
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John Frum
22 Sep 2016, 11:14 PM
Clueless frogs still wading in the simmering water.

Shop till you pop.

Is it getting warm in here?

Nah, global warming is a hoax.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Ex BP Golly
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John Frum
22 Sep 2016, 11:00 PM

Housing Bubble.



Population ponzi bubble.
Nah, Hervey N probably just milked more out of the franchisees and suppliers.

Did you know that each division on the floor of a Hardly Normals is its own franchise?

Bedding, furniture, computers, whitegoods etc?

H.N. is mainly a developer with a massive estate agent- franchisee management division.

Wouldn't surprise me that they buy up land around future malls as land bankers as well.

WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Bardon
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Ex BP Golly
23 Sep 2016, 01:01 AM
Nah, Hervey N probably just milked more out of the franchisees and suppliers.

Did you know that each division on the floor of a Hardly Normals is its own franchise?

Bedding, furniture, computers, whitegoods etc?

H.N. is mainly a developer with a massive estate agent- franchisee management division.

Wouldn't surprise me that they buy up land around future malls as land bankers as well.

Good business model that.
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Bardon
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Jon Snow
22 Sep 2016, 11:09 PM
Hard to believe these guys are still in business at all.

Crap range,crap locations, crap store layout, crap prices, non-existent service.
Harvey Norman’s record profit ‘proves critics wrong’

Harvey Norman chairman Gerry Harvey says the company’s record net profit of $448.98 million has proved wrong the many critics of his business style, including unscrupulous short-sellers that have been attempting to sink his share price for years, with his international arm now primed for stellar growth in the next few years.

Helped by a booming property market, which delivered an extra $59.69m kick to earnings as the value of Harvey Norman’s extensive property portfolio grew substantially, the retailer is also riding a wave of consumer demand for furniture and electronic goods despite shoppers pulling back on spending in other areas.

Mr Harvey told The Australian that the full-year profit for 2017, up 29 per cent, was “the best we have ever done” and unprecedented in the company’s 30-year-plus history.

A cut to dividends did disappoint however, as did sales growth since June, with investors offloading Harvey Norman shares, which dropped 33c, or 7.48 per cent, to close at $4.08 yesterday.

Profit before tax of $664.82m, excluding impairments, was up 26.3 per cent, and Mr Harvey said he was especially pleased with Harvey Norman’s offshore retail stores in Ireland, Slovenia, Malaysia, Singapore and New Zealand, which had contributed just under $100m in profits.

Mr Harvey said critics of his offshore expansion would now look like “bloody idiots” if they continued to fire shots at his overseas retail arm. The billionaire added he was optimistic about the state of the Australian economy, despite concerns over stagnant wages growth, rising household debt and the property bubble.

Specialist furniture and consumer electronics retailers, such as Harvey Norman, JB Hi-Fi and The Good Guys, were all reporting strong earnings as Australians filled their homes with gadgets, whitegoods and homewares.

Mr Harvey said while some economists were predicting gloom, “they are looking at growth over the next one to three years, not really looking at stagnation”.

“So the reality is the outlook is regarded as being pretty positive,’’ Mr Harvey told The Australian.

That rosy outlook was reflected in Harvey Norman’s fiscal 2017 performance that showed franchisee sales revenue of its Australia and New Zealand brands at $5.62bn in the year to June 30, up 5.4 per cent on the prior year.

Revenue from its overseas stores rose 2.1 per cent to $1.83bn.

However, Citi analyst Bryan Raymond said fourth-quarter sales and the trading update for July and August were disappointing, with the 2.3 per cent like-for-like sales growth in the quarter and 3.2 per cent in July and August “well below” his forecasts, reflecting a normalisation of sales growth as the housing cycle moderates.

The company declared a final dividend of 12c a share payable on December 1, down 5c a share and short of analysts’ expectations, and a full-year dividend of 26c, fully franked, down 4c on last year.

Mr Harvey said he was especially pleased with his retailers’ offshore performance, and that offshore profits could soon double to $200m. “Our aim is to try to get that up to $200m, so from our point of view we can’t double the profit in Australia in the next three to five years but we think we can overseas.”

http://www.theaustralian.com.au/business/companies/harvey-normans-record-profit-proves-critics-wrong/news-story/fd5f97d0be1895b689b2c65d2b936892
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Rufus
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Harvey Norman doesn't sell anything, they rent retail space, so a property boom is manna from heaven for them.
Take risks - if you win you will become wealthy, if you lose you will become wise
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