Harvey Norman has posted its FY23 results, with the home retailer struggling to keep up profits as discretionary spending drops.
Australia’s largest home goods retailer Harvey Norman has revealed it’s dwindling profitability in FY23 as the covid boom in discretionary spending is pushed to the side amid cost of living pressures.
Harvey Norman has revealed a $776.08 million (before tax) profit in FY23, and while this has dropped by 32 percent on FY22, it is 35 percent above the pre-pandemic levels in FY19.
The company reported a total consolidated sales revenue of $4.275 billion across all business segments, 5.1 percent down on last year, but it was up 25 percent on FY19. This is broken down to product sales at $2.776 billion, franchisee revenue of $1.171 billion, and revenue and other income items at $327.99 million.
Despite these less than impressive results, Chairman Gerry Harvey and Director and Chief Executive Officer Katie Page were optimistic the company was in a good position for stability and growth in their address to stakeholders in Harvey Norman’s Annual Report.
“Amid progressively worsening macroeconomic conditions and cost of living pressures this year, our balance sheet remains strong with total assets of $7.67 billion, anchored by a $4 billion property portfolio,” the pair wrote in Harvey Norman’s annual report. “We have delivered a substantial 40 percent growth in net assets since the beginning of the pandemic, rising to $4.47 billion as at 30 June 2023.”
“Our prudent financial management has resulted in ample liquidity and a low net debt to equity ratio of 13.85 percent, providing us with the capacity to access additional liquidity as required. Our operating cash flows are strong at $680.26 million for FY23, delivering a cash conversion ratio of 97.4 percent. This was achieved by a significant improvement in working capital in 2H23 with operating cash flows growing by $308.05 million compared to 2H22, a cash conversion ratio of 108.4 percent in the 2nd half.”
Going forward, the pair identified that, “technological advancement remains a key priority, as we continue to invest in initiatives to bolster our digital infrastructure and enhance customer loyalty. Our solid financial position continues to hold us in good stead to withstand the current challenges affecting discretionary retail.”