Retailer Harvey Norman says it remains cautious into fiscal 2012 due to global volatility and weak domestic conditions after posting a nine per cent increase in full year profit.
Harvey Norman Holdings Ltd said net profit after tax increased to $252.26 million in the year to June 30, up from $231.41 million in the previous year.
Harvey Norman brands experienced a “strong increase” in customer transactions even though revenue was down, largely thanks to the strong Australian dollar leading to reduced prices on imported goods.
“The outlook for 2011/12 remains cautious due to global volatility, increased utility costs, possible increase in unemployment numbers, dampened housing markets and weak equity markets,” the company said in a statement.
At 1300 AEST Harvey Norman shares were one cent higher, or 0.5 per cent at $2.04, while the broader market was 0.7 per cent higher.
Revenue was $2.70 billion, compared to $2.45 billion in full year 2010. Sales from the franchised Harvey Norman complexes, commercial divisions and other sales outlets in Australia fell 5.3 per cent for the period July 1 to August 29 compared to the corresponding prior year period.
The company said it anticipated increased sales in the lead-up to the Rugby World Cup in New Zealand and the London Olympics as it ramps up its online strategy.
“We look forward to the Rugby World Cup enhancing the television category and, of course, in the second half of the upcoming financial year, the world will be gearing up for the biggest ever Olympics in London, which is always good for our AV/IT business.”
The company said there had been much commentary about the cautious consumer, but Harvey Norman franchisees had “never experienced so much customer traffic and transactions”.
While this had put pressure on costs, each franchisee business had many more customers but lower revenue.
It added that it had a “strong balance sheet” underpinned by a $2.04 billion property portfolio and generates strong cash flows from its franchising operations.
“We are well-placed to take advantage of emerging opportunities,” Harvey Norman said.
The most significant addition to the business in the first half of fiscal 2012 would be the launch of its ecommerce site in early October 2011.
“Using market intelligence, we have already gained from our successful photo-finishing and Domayne sites we are confident our on-line transactional strategy will produce incremental dollars to the existing channel,” it said.
Meanwhile, the company’s Springvale, Victoria, homemaker centre was on track to open in October 2011. The company’s new Space Singapore store opens in September, about the same time as its sister store in Kuala Lumpur. Maribor, Slovenia, will open in October as will Zagreb, Croatia. It also said Ireland and Northern Ireland continued to endure stagnant economic conditions.
The company offered a final fully franked dividend of six cents per share.
