The Harvey Norman Holdings Limited (ASX: HVN) share price is up more than 3% after reporting its FY23 result.
Harvey Norman has franchised a large number of stores across Australia, and it also has a growing number of company-operated stores in New Zealand, Singapore, Malaysia, Ireland, Northern Ireland, Slovenia and Croatia.
Harvey Norman share price
FY23 result
Here are some of the highlights for the FY23 report:
- Total system sales revenue fell 4.5% to $9.19 billion
- EBITDA (EBITDA explained) decreased by 21.3% to $1.44 billion
- Statutory profit before tax down 32% to $776 million
- Reported net profit down 33.5% to $539.5 million
- Final dividend of $0.12 per share, down 31.5%
- Annual dividend per share of $0.25 per share, down 33.3%
The company’s net assets continue to grow, increasing slightly to $4.47 billion, and this has risen from $3.2 billion in FY19. The property portfolio is worth $4 billion according to the company.
Its company-operated overseas retail stores comprised around a fifth of its total profit before tax, excluding net property valuations. However, overseas retail profitability plunged 40% to $139 million mainly due to economic headwinds, a significant deterioration in New Zealand, a “contraction” of trading conditions in Europe and the “normalisation” of margins and costs after COVID.
The Australian franchising operations saw segment profit before tax of $373 million, down 32.5%. The Harvey Norman share price may be challenged until this turns around.
Management commentary
Harvey Norman leader Gerry Harvey said:
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.
Outlook for the Harvey Norman share price
It’s still making good profit and paying a fairly high dividend yield. The business can rebound when retail conditions improve, but it could take a while before things get truly better, with interest rate cuts by the RBA seemingly not in the immediate future.
Plus, there’s the long-term uncertainty of a shift to online shopping – how will Harvey Norman stores and the business model adapt to this?
For me, there are other ASX dividend shares that have a clearer future for success.
