Company Reports

Harvey Norman's fiscal 2026 global sales revenue increased 3% to AUD 9.6 billion. Underlying net profit after tax rose 9% to AUD 438 million. But after a strong first half, sales momentum deteriorated in the second half, and expansion in the United Kingdom is taking a toll on group earnings.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

Harvey Norman shares are down about 20% since the interim fiscal 2026 results, amid pessimistic consumer sentiment. But household goods retail sales are broadly holding up. They grew 5.2% in the second half to May 2026, moderating only slightly from 5.9% in the first half of fiscal 2026.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

Harvey Norman shares shed 9% despite reporting first-half fiscal 2026 profit before tax of AUD 470 million, up 17%, as strong sales momentum continues from last year. The retailer also announced a fully franked interim dividend of AUD 0.15 per share, up from AUD 0.12 last year.

Harvey Norman said at its AGM that sales momentum is holding up. Harvey Norman's and JB Hi-Fi's core Australian businesses are enjoying solid demand for consumer electronics and home appliances. Sales are increasing by midsingle digits at Harvey Norman and JB Hi-Fi in fiscal 2026 year-to-date.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

Harvey Norman's global sales revenue for fiscal 2025 increased 6% to AUD 9.4 billion. Pretax profits jumped 9% to AUD 590 million. Sales momentum strengthened in the second half and is carrying over into fiscal 2026. The stock rallied 11%.

Household incomes are growing in real terms after a period of rampant inflation. With inflation back within the Reserve Bank of Australia’s target range, the focus is shifting to keeping the job market in good shape. Monetary settings are slightly restrictive, providing room for more easing.

Tariffs are softening Australian consumer sentiment and investors are preferring defensives over cyclical retailers. Since sweeping US tariffs were announced April 2, our Morningstar Australia Consumer Defensive Index is up 3%, but the Morningstar Australia Consumer Cyclical Index is flat.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

Harvey Norman’s global system sales lifted 4% in interim fiscal 2025. Australian franchised sales increased by 6%, due to improving demand. However, underlying group profit after tax was up only 1% to AUD 216 million, as New Zealand and the UK dragged.

Australian consumer sentiment is gradually improving. The pressure on household budgets is slowly easing with lower inflation and stabilizing real incomes. Shoppers are more optimistic about the economic outlook and believe further interest-rate hikes are off the table.

Trading momentum for nonessential goods is picking up. So far in fiscal 2025, sales growth is improving at Super Retail’s chains and Woolworths’ Big W discount department stores, as well as at electronics goods retailers JB Hi-Fi, Harvey Norman, and Kogan.

Fiscal 2024 was a year to forget for the Australian retailing sector, and no-moat Harvey Norman wasn’t exempt from the challenging marcoeconomic environment. In its largest overseas market, New Zealand, it was even worse. Consumers across the Tasman are hurting more, with elevated cost-of-living pressures compounded by even higher interest rates than in Australia and declining house prices reversing the wealth effect.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.

The upcoming August 2024 reporting season will draw the line under a difficult year for Australian retailers in which they navigated soft demand and soaring labor costs. The combination results in a profit margin crunch and declining earnings for many retailers.

Talk of interest rate cuts and impending tax cuts is sparking a rally in consumer cyclicals. We agree these factors improve the near-term outlook for consumer spending, with cyclical retailers more exposed. We expect the combined impact of fiscal and monetary tailwinds to underpin mid-single-digit growth in total retailing sales in the medium term—compared with our estimate of only 2% growth in fiscal 2024. But underlying our near-term forecast is a significant divergence across categories, with sales in cyclicals virtually flat and defensives up 4%.

Harvey Norman predominantly sells commoditized branded electronics, such as televisions and computers, home appliances, and furniture. We expect the growth of the Australian consumer electronics market to lag overall consumer spending because of constant deflation driven by intense competition. Headwinds continue to mount as internet research and price comparisons threaten Harvey Norman's brick-and-mortar peers. In the core Australian market, Harvey Norman must compete on price with online offers, despite offering its customers in-store service and advice.