How Did Harvey Norman Achieve a 47% Profit Surge in FY25?

Strong Sales and Profit Growth

Harvey Norman Holdings Limited has delivered a compelling FY25 financial performance, marked by a 6.1% increase in Australian franchisee sales revenue to $6.43 billion and company-operated sales revenue rising to $2.92 billion. This translated into total system sales revenue of $9.35 billion, underpinning a 25.3% jump in EBITDA to $1.13 billion and a 47% surge in reported profit after tax to $518 million.

The company’s earnings growth was supported by a solid second half, with operating cash flows rebounding strongly by 30.1% compared to the prior corresponding period, achieving a cash conversion rate of 95.1%. This resilience reflects Harvey Norman’s integrated retail, franchise, property, and digital system, which continues to deliver steady performance across its diversified operations.

Property Portfolio Drives Significant Gains

A standout feature of FY25 was the substantial net property revaluation increment of $154 million, which doubled the property segment’s pre-tax profit to $321.55 million. The company’s freehold property portfolio, valued at $4.53 billion, remains a cornerstone of its competitive advantage, benefiting from strong investor confidence and limited new supply in the large-format retail property market.

Capital additions and refurbishments, including the new Macgregor Homemaker Centre in Queensland, contributed to the portfolio’s growth. The property segment’s rental income also increased by 7.6%, supported by higher market rentals and lower vacancy rates, reinforcing the strength and defensibility of Harvey Norman’s asset base.

Overseas Expansion and Digital Investment

The overseas company-operated retail segment expanded with eight new stores, achieving a 7.6% sales increase to $726 million and a 38.2% rise in segment profit to $110 million. Despite some challenges, such as losses in the new English market and wage inflation, the company’s international footprint across seven countries continues to grow strategically.

Harvey Norman also emphasized ongoing investment in technology and digital transformation, enhancing its online sales channels and customer engagement tools. This digital focus supports franchisees and company-operated stores alike, positioning the group well for evolving consumer trends, including rising demand for AI-enabled products.

Outlook and Market Momentum

Looking ahead, Harvey Norman plans further store openings and refits in FY26, including a second store in England’s West Midlands and new stores in Malaysia and Singapore. Early trading momentum has continued into FY26, with aggregated sales up 9.9% and comparable sales rising 8.7% in July 2025 versus the prior year.

The company’s versatile operating model, strong balance sheet with net assets of $4.84 billion, and conservative net debt-to-equity ratio of 13.43% provide a solid foundation for sustained growth. However, the upfront investment costs in new markets and inflationary pressures remain factors to watch.