Harvey Norman’s FY25 Profit Before Tax Up Nearly 40%, Aligns With Analyst Consensus

Context of ASX Inquiry

Harvey Norman Holdings Limited (ASX, HVN), a major player in the retail sector specialising in consumer electronics and homewares, recently addressed an ASX Aware Letter following its FY25 results announcement. The letter sought clarity on whether the company’s reported earnings materially differed from market expectations, a critical issue given the regulatory emphasis on timely and transparent disclosure.

Earnings Guidance and Analyst Forecasts

HVN confirmed it did not publish any earnings guidance for the financial year ended 30 June 2025. This absence of formal guidance meant the company relied on sell-side analyst forecasts to gauge market expectations. However, HVN highlighted that analysts do not reliably forecast its Reported Profit Before Tax (PBT) due to the significant role of unobservable inputs in valuing right of use assets and investment properties, complex accounting estimates detailed in the company’s 2025 Annual Report.

Reported Profit Before Tax and Market Alignment

Despite these forecasting challenges, HVN stated that its Reported PBT for FY25 was not materially different from market expectations. The company noted a 39% increase in Reported PBT compared to the prior corresponding period, consistent with the 41.2% increase reported at the half-year mark. For the Profit Before Tax measure excluding certain accounting impacts, the company’s results reflected a 9.3% increase year-on-year and were within a 15% variance of the analyst consensus estimate of approximately $589 million.

Compliance and Disclosure Considerations

HVN affirmed that it did not identify any material variance between its expected earnings and market expectations prior to releasing its results, and therefore did not consider earlier disclosure necessary under ASX Listing Rules 3.1 and 3.1A. The company confirmed full compliance with continuous disclosure obligations and stated that its responses to the ASX were authorised by its board.

Implications for Investors and Analysts

This correspondence sheds light on the challenges analysts face in forecasting earnings for companies with significant valuation complexities. While HVN’s results appear broadly in line with market expectations, the lack of published guidance and reliance on consensus estimates underscore the importance of scrutinising underlying accounting assumptions. Investors may want to pay close attention to the detailed notes in HVN’s financial statements to better understand earnings drivers going forward.