Harvey Norman, which applied for $12.7m in wage subsidies in New Zealand, has posted a bumper full year profit on the back of a sales rush fuelled by lockdown and the Covid-19 pandemic.
The Australian furniture and home goods retailer's net profit after tax increased by almost 20 per cent in the 12 months ending June 30. It posted a full-year net profit of A$480.5 million ($525m), up 19.4 per cent on the same time a year earlier.
The company said its stores in its eight operating markets all benefited from a surge in sales between March and June as the pandemic fuelled demand for furniture and home entertainment.
New Zealand sales increased by 1.5 per cent to $1.01 billion in the year, up $14.9 million on $998m in the previous year. Translated to Australian dollars, its sales revenue increased 2.7 per cent in the year.
Local sales dropped 7.5 per cent in Q4 compared to the same period last year, while its Q3 sales increased 5.9 per cent.
Sales from its Australian franchisees increased 8.9 per cent in the year.
Its New Zealand earnings increased 28.1 per cent or $21.7m in the year to $99.1m, compared to $77.3m in the previous year.
Harvey Norman attributed a focus on home renovations and improvements, with international travel off the cards, coupled with a stable housing market to the increase in sales in New Zealand, similarly to sales increases in Australia.
As of August 30, Harvey Norman had received more than $12.7m in wage subsidies for 1850 New Zealand employees.
Total group earnings (Ebitda) jumped 20.1 per cent to A$742.5m in the period compared to A$618.3m in FY19, while its sales revenue for the period rose 7.6 per cent to A$8.23 billion.
Harvey Norman chairman Gerry Harvey said the results were a "testament to the strength of" the company's business model.
"As we are in the lifestyle/home retail space, the customer was appreciative of the shopping experience, spaciousness and easy parking at the physical franchised complexes and stores, whilst embracing the ease of connection to our brands digitally and the important convenience of home delivery and click and collect," Gerry said in the ASX results document.
FY2020 was a year of "unique challenges" in all of its markets, operating throughout drought and bushfires last summer followed by the Covid-19 pandemic, he said.
In the chairman and CEO's report, the company said the global impact of the pandemic remained unknown.
"To date, the biggest consumer change we have seen in our eight countries is the elevated importance of family, home, work and study from home, cooking and entertainment from home. Our brands are well placed to take advantage of this trend."
Harvey Norman's net assets grew 8.7 per cent to A$3.48b over the year and cost-cutting measures to preserve capital during the pandemic enabled it to pay down its debts.
It had an unused debt lending facility worth A$685m at June 30.
"The robust cash flows generated from operating activities of over a billion dollars this year, coupled with the stringent measures implemented during FY20 to preserve cash, were used to paydown external debt."
The company said it was well-placed to respond to challenges as they arose.
It will pay out a final dividend of 18 cents per share in November.
Harvey Norman has company-operated stores in New Zealand, Slovenia, Croatia, Ireland and Northern Ireland and part-owned stores in Singapore and Malaysia, while stores in Australia are franchised.