Harvey Norman (HVN) operates in the retailing sector principally as a franchiser. The stores sell homewares, electrical products, and computers. Revenue is derived from retailing, the provision of advisory and advertising services to franchisees, and property investment. The company has about 167 outlets in Australia, New Zealand, Slovenia and Ireland and investments in controlled entites Rebel Sport and Pertama Holdings (Singapore).

As a retailer and franchise operator of homewears and electrical equipment, HVN benefits from strong housing growth and adoption of new technology, such as digital cameras and videos and DVD players. The franchise sales mix is in the region of electrical, 45%, computers, 28%, furniture 22% and other, 5%.HVN is beginning to expand beyond Australia and New Zealand with new store openings in Slovenia and Ireland. HVN strategy is to grow earning internationally because Australian operations have hit maturity. HVN are leveraging off the skill base derived from its franchisees to grow operations in foreign markets. The investment and turnaround of Rebel Sport shows how HVN has harnessed its management expertise to turnaround a domestic retail concept. The strategy going forward is to leverage this expertise overseas and domestically.Harvey Norman Holdings reported NPAT (under AIFRS) up 18% to $131.9m for the half year ended 31 December 2005. Under AGAAP, NPAT for the period would have risen 14% to $101.4m. Revenues from ordinary activities were $1.14bn, up 13% from the same period last year. Like for like sales for the period increased by 6.5%, and like for like sales for the 8 months to 28 February 2006 increased by 7.5% over the pcp. Diluted EPS was 12.47 cents compared to 10.46 cents last year. Net operating cash flow was $111.6m compared to $8.4m last year. The interim dividend declared was 4 cents compared with 3 cents last year.

30/06/06

Leading Index

ASX 100

Sector Index

Consumer Discretionary

Industry Group

Retailing