AI-led computers, mobiles help lift Harvey Norman profit

Harvey Norman chair Gerry Harvey reckons consumers have cast aside cost-of-living pressures to stock up on artificial intelligence-led computers and mobile devices, helping the furniture, electronics and white goods giant deliver a 15 per cent increase in half-year profit.

Post-tax profit hit $321.9 million in the six months to the end of December, with revenue up 6.9 per cent to $5.16 billion. The result on Friday was driven by more consumers upgrading to the latest AI-powered devices, Mr Harvey says.

“All those people that have bought a computer in the last five to 10 years, they’re all now looking at upgrading,” he said.

“There will be a lot of that happening over the next two years. We’ve got a lot of new product coming to market over the next year or two.”

Mr Harvey echoed the comments from other major retailers this month in saying that he was yet to see the impacts of the Reserve Bank’s interest rate hike on consumer spending.

“You see (the impacts) particularly in the first week or two afterwards but then it tends to disappear,” Mr Harvey said.

“It just means that instead of 10 people coming through the door, you get nine and then a week or two later you get 10 again.

“(Consumers) get an initial shock and then they get on with their lives.”

Mr Harvey added: “Our sales are OK at the moment but I don’t know how they will go in the next 12 months”.

“The problem we have got at the moment is, yes we’ve just had (an interest rate hike) but now it looks like we’ll have another one and then maybe another one,” he said.

Australian franchise sales rose 4.8 per cent to $3.5b, a result Harvey Norman said was driven by growing consumer demand for new technology, along with the steady performance in core homemaker categories.

Harvey Norman’s profit from overseas stores grew by 35.6 per cent across New Zealand, Ireland, Singapore, Malaysia, Slovenia and Croatia.

This was partially offset by the expected establishment losses associated with expansion in the UK.

“Our overseas retail businesses delivered meaningful profit growth this half, reflecting improved trading conditions in several markets, disciplined execution and the benefits of recent store investments,” Mr Harvey said.

“The UK continues to progress as expected, with the Merry Hill flagship building brand presence during its establishment phase.”

Harvey Norman shares closed down 9 per cent to $5.76 on Friday.

Earlier this month, JB Hi-Fi boss Nick Wells said consumers were prioritising spend on technology, particularly mobile phones, because it was becoming less discretionary for them.

The group — which also owns JB Hi-Fi New Zealand, The Good Guys chain and home appliance and bathroom retailer e&s — posted a 7.3 per cent jump in half-year revenue to a record $6.1b as net profit lifted 7.1 per cent to $305.8m.