Harvey Norman share price higher despite tumbling profits

Harvey Norman has released its FY 2023 results. How did it perform?

| More on:
Happy couple doing online shopping.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Harvey Norman Holdings Limited (ASX: HVN) share price is rising on Thursday.

In morning trade, the retail giant's shares are up 2% to $3.92.

This follows the release of Harvey Norman's FY 2023 results.

Harvey Norman share price falls on results release

  • Revenue down 3.8% to $9,193 million
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 21.3% to $1,130.7 million
  • Profit before tax down 27.8% to $680.2 million
  • Net profit after tax down 33.5% to $539.5 million
  • FY 2023 fully franked dividend down 33% to 25 cents per share

What happened in FY 2023?

For the 12 months ended 30 June, Harvey Norman reported a 3.8% decline in revenue to $9,193 million. This comprises aggregated headline franchisee sales revenue of $6,417 million and company-operated sales revenue of $2,776 million.

Also heading in the wrong direction were the company's operating expenses, which increased 8.1% over the 12 months. Management notes that this was due to its expenses being abnormally low last year due to COVID restrictions. Total operating expenses as a percentage of total system sales revenue stood at 17.68%, which is comparable to pre-pandemic levels.

However, the combination of softer sales and higher expenses means that Harvey Norman's profits took a big hit in FY 2023.

Profit before tax (excluding property revaluations) was down 27.8% to $680.2 million. Though, it is worth highlighting that this is still almost 35% higher than pre-pandemic profits and represents a four-year compound annual growth rate of 7.8%.

Some of this weakness was blamed on macroeconomic headwinds, a deterioration in business and consumer confidence, and the normalisation of margins and operating costs globally in the post-COVID environment.

Unsurprisingly, with its profits under pressure, the Harvey Norman board decided to cut its dividend. A fully franked final dividend was declared, which brought its total dividends to 25 cents per share in FY 2023. This is down 33% on last year's payout.

Management commentary

Harvey Norman's chair, Gerry Harvey, commented:

We are confident in the quality of the Harvey Norman, Domayne and Joyce Mayne brands and the solid market position of our Australian franchisees and overseas company-operated stores. We are committed to delivering stable returns and sustainable growth for our stakeholders and are well-placed to benefit from any upturn in trading conditions and any growth that may arise from the home renovation cycle, new home starts and net migration increases. We are on track to deliver our Malaysian expansion plan as announced last year, and are committed to strengthening our brands and global footprint.


No guidance has been provided for FY 2024. However, management has provided an update on its sales until the end of July.

That update shows that sales are down across all but one region, with its local operations among its worst performers. Australian Franchisee sales are down 12.3% for the two months, with comparable store sales down 12.6%.

The only region posting positive sales growth is Malaysia, which has been boosted by the opening of new stores. Total sales are up 0.6% but comparable store sales are down 5.7%.

Those store openings won't be the last. Management advised that it plans to increase its footprint in Malaysia to 80 stores by the end of 2028. This compares to 30 today.

The Harvey Norman share price is now down 8% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

Here's why this ASX 200 healthcare stock is roaring 13% higher on Wednesday

This healthcare company is outperforming every other stock within the ASX 200 today.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock jumped 10% after posting strong half-year results

This ASX 200 delivered a finger lickin' good result.

Read more »

a group of tech people gather around a computer operated by a young woman while the group looks on in support.
Technology Shares

Nvidia shares in focus after Q3 earnings smash expectations thanks to AI boom

This tech giant is growing at a spectacular rate thanks to artificial intelligence.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Earnings Results

Webjet shares sink despite 120% half-year profit boost

This travel company delivered stunning growth during the first half. But it wasn't enough for some.

Read more »

A young woman with her mouth open and her hands out showing surprise and delight as uranium share prices skyrocket
Earnings Results

Guess which ASX 200 tech stock is rising after beating guidance and upgrading targets

TechnologyOne has beaten its guidance and brought forward its medium term targets.

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Earnings Results

Guess which ASX 200 stock is rising after announcing a special dividend with its FY23 results

Earnings are down but a special dividend is coming for shareholders.

Read more »

A boy is about to rocket from a copper-coloured field of hay into the sky.
Earnings Results

This ASX 200 stock just ripped 11% higher. Here's why

Investors are bidding up the ASX 200 stock following the release of its FY 2023 results.

Read more »

a woman in business wear looks at her phone against the window of a high rise space with a city landscape view of tall buildings outside.
Earnings Results

ASX 200 stock surges 11% on mega revenue gains

This ASX 200 tech company has just released its 3Q FY23 update... and the market likes it.

Read more »