The Harvey Norman Holdings Limited (ASX: HVN) share price has fallen to $4.28 in morning trade. This follows the release of positive company results for the financial year ending 30 June 2020.
At the opening bell, The Harvey Norman share price went up to $4.49 on FY20 news, before dropping to $4.28 at the time of writing.
How did Harvey Norman perform in FY20?
The multi-national retailer company reported a record result for its full-year earnings. Harvey Norman delivered total sales revenue of $8.46 billion in FY20. A major catalyst for this was a shift in consumer behaviour as a result of the coronavirus pandemic.
On the bottom line, underlying net profit after tax and non-controlling interest increased to $462.16 million, up 30.9% from FY19.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $742.47 million, an increase of 20.1%.
Harvey Norman recorded a positive cash flow from operating activities to $1.1 billion, which grew 183% while earnings per share also rose 15.4% to 39.19 cents.
The company’s balance sheet remains healthy with the value of net assets standing at $3.48 billion, up from $3.2 billion.
Harvey Norman has a net cash balance of $15.35 million. This compares to a net debt position of $626.47 million in the prior year.
The board declared a fully franked dividend of 18 cents per share to be paid on 2 November. This is an increase on the 12 cents declared on 1HFY20 results.
COVID-19 impact
Temporary overseas store closures during COVID-19 affected FY20 sales performance figures. Government subsidies relieved some pressure with wages and assistance support of $22.28 million and property-related support and assistance of $9.81 million.
In Australia, certain franchisees were eligible for the Government JobKeeper support which helped with the retention of employees.
What did management say?
Harvey Norman chair Gerry Harvey said:
Globally, the 2020 financial year was a year of unique challenges. The drought and bushfires last summer, followed by COVID-19, had a significant impact in the 8 countries where we, or our franchisees, trade.
Pleasingly, customers continued to engage strongly with our brands and importantly, 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. The results achieved in 2020, are a testament to the strength of our model.
FY21 outlook
Management has noted the outlook going into FY21 remains unknown due to the global impact from coronavirus. However, the company saw a sales uptick in the last quarter in Australia and has accelerated in July and August.
Furthermore, Harvey Norman advised that overseas sales have improved in its company-operated stores following the decision to loosen restrictions to the public.
About the Harvey Norman share price
The Harvey Norman share price has made a stunning recovery since plummeting to a 52-week low of $2.33 in March. Whilst trading almost 10% lower than the $4.87 reached the month before, the Harvey Norman share price has fallen 2.3% in year-to-date trading.
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