Runaway property prices and blistering summer weather helped drive furniture and whitegoods retailer Harvey Norman's half-year profits 39 per cent higher to $257.29 million.
Earnings from Harvey Norman's property business spiked 91 per cent, largely due to revaluations of properties it owns.
Reversing out contributions from its $2.6 billion property business, the retailer's profit after tax grew 19.7 per cent to $204.27 million.
Harvey Norman, which did not host media or analyst briefings to accompany its ASX announcement, revealed franchise sales grew 5.2 per cent to $2.86 billion. It said the profitability of the franchising operation was 14.4 per cent stronger at $172.13 million.
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The growth in profits from the franchised retail operation reflects a $17.09 million jump in franchise fees to $430.20 million, which Harvey Norman attributed to a 5.2 per cent increase in "headline, aggregated franchisee sales revenue" to $2.86 billion.
Sames-store sales in the Harvey Norman franchise network increased 4.7 per cent to $2.84 billion thanks to high auction clearance rates, which fuelled consumer demand for its home-maker products, while hot weather along the eastern seaboard powered sales of air conditioners.
Profit before tax was 39.8 per cent stronger at a record $366.23 million and Harvey Norman announced a 14¢ dividend for the half, up from 13¢ in the previous corresponding period.
Harvey Norman chairman Gerry Harvey said the group's franchise model and its dominance of the home and lifestyle categories supported the jump in franchisee sales.
"Housing continues to be robust and franchisees large-store formats and tech-savvy staff have been able to showcase the integration of home lifestyle and technology that is really exciting consumers," Mr Harvey said.
Harvey Norman said the result reflected strong retail spending in NSW and Victoria as well as the "wealth effect" of higher house prices in these markets.
"Technology is changing at an ever-increasing pace and every day brings a new product to help up manage our work commitments and to better enjoy our home and leisure time," Mr Harvey said.
Harvey Norman's company-operated retail operations reported a net profit before tax of $51.56 million, up 22.06 per cent from $42.06 million in the previous first half.
The group's Northern Irish operation continued to lose money, however, losses fell to $2.15 million in the six months to December and all other overseas operations recorded a profit in the loss, including Croatia for the first time.
"We are seeing strong gains in brand recognition and market share in our overseas markets and this is translating into increased sales revenue," Mr Harvey said.
"At the same time the businesses have achieved material cost efficiencies and improved supplier relationships which have driven profitability."
More to come
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