The Harvey Norman Holdings Limited (ASX: HVN) share price is surging higher on Monday after the release of a sales and profit update.
At the time of writing, the retail giant’s shares are up a sizeable 4% to $4.53.
What did Harvey Norman announce?
Harvey Norman’s trading update reveals that business has continued to boom in FY 2021 for its international businesses and Harvey Norman, Domayne, and Joyce Mayne businesses in Australia.
According to the release, comparable aggregated sales for the period 1 July 2020 to 17 September are up a massive 30.3% compared to the prior corresponding period.
Pleasingly, the good news doesn’t stop there. Harvey Norman is currently benefiting from higher margins, leading to its earnings growing at an even quicker rate over the period.
Management advised that unaudited preliminary accounts for the period 1 July 2020 to 31 August 2020 indicate a profit before tax of $178.1 million. This is an increase of 185.8% on its profit before tax of $62.3 million during the same period last year.
This profit before tax excludes the net impact of AASB 16 Leases and net property revaluation adjustments.
How are its Melbourne stores performing?
Harvey Norman also provided the market with commentary on how its stores in Melbourne have been performing following stage four lockdowns.
It explained: “Franchised complexes in greater Melbourne, Victoria were closed to the public from 6th August 2020 to date as a direct result of the Stage 4 Restrictions mandated by the State Government of Victoria.”
And while its “franchisees quickly moved to service their customers via Click & Collect and contactless deliveries”, this wasn’t enough to stop the sales turnover of its affected franchisees from being “adversely affected by these mandated closures.”
Given the disruption that these stores have faced, Harvey Norman’s overall sales and profit growth early in FY 2021 is arguably even more impressive than it first appears.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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