Harvey Norman’s 1H26 Surge: Overseas Growth and Property Gains Drive Profit Jump
Harvey Norman Holdings Limited reported a robust 6.9% rise in system sales revenue for 1H26, underpinned by strong Australian franchisee performance and overseas expansion. Profit before tax climbed 16.5%, boosted by property revaluations and disciplined cost management.
- System sales revenue up 6.9% to $5.16 billion
- Profit before tax increased 16.5% to $466.31 million
- Overseas company-operated stores deliver 35.6% profit growth
- Property segment benefits from $95.8 million net revaluation gain
- Strong balance sheet with low gearing and $4.95 billion net assets
Solid Sales Momentum Across Australia and Overseas
Harvey Norman Holdings Limited has delivered a strong first half for the 2026 financial year, with total system sales revenue rising 6.9% to $5.16 billion. This growth was driven by a 4.8% increase in aggregated Australian franchisee sales to $3.50 billion and an 11.6% jump in company-operated retail sales overseas, which reached $1.66 billion. The company’s integrated retail, franchise, property, and digital system continues to underpin its competitive advantage, particularly through its diversified international footprint.
Profitability Boosted by Overseas Expansion and Property Gains
Profit before tax (PBT) rose 16.5% to $466.31 million, reflecting improved earnings from Australian franchising operations and robust performances across overseas company-operated stores in New Zealand, Singapore, Malaysia, Ireland, Slovenia, and Croatia. Notably, the overseas retail segment’s PBT surged 35.6%, highlighting the success of international expansion efforts. The property segment also contributed significantly, with a $95.8 million net revaluation gain recognised in the income statement, supporting a 7.8% increase in property segment PBT to $178.82 million.
Disciplined Cost Management and Marketing Efficiency
Despite the sales growth, Harvey Norman maintained tight control over operating expenses, which fell slightly as a percentage of system sales to 17.8% from 18.0% in the prior period. Marketing expenses remained flat at 3.8% of system sales, demonstrating effective cost discipline while sustaining brand presence. This balance contributed to strong double-digit earnings and earnings per share growth, with basic EPS up 15.3% to 25.84 cents.
Robust Balance Sheet and Cash Flow Position
The company’s balance sheet remains solid and asset-rich, with net assets increasing 4.9% to $4.95 billion and a low net debt-to-equity ratio of 13.02%. Operating cash flows were strong at $392.88 million, although slightly lower than the prior year due to increased inventory funding to support sales growth, particularly in premium technology categories. Cash reserves remain ample, supporting ongoing investments in store expansions and digital transformation.
Strategic Growth and Expansion Outlook
Looking ahead, Harvey Norman plans to continue expanding its store network, particularly in the UK, Malaysia, and Croatia. The company is progressing with new store openings in the West Midlands region of the UK and has secured land for a flagship store in East Zagreb, Croatia, expected to open in 2027. Investment in technology and digital infrastructure remains a priority, supporting the growing consumer demand for AI-enabled devices and omni-channel retail experiences.
Bottom Line?
Harvey Norman’s diversified growth strategy and disciplined management set the stage for sustained momentum, though UK expansion losses warrant close watch.
Questions in the middle?
- How will losses in the UK stores impact near-term profitability and expansion plans?
- What is the expected contribution from new store openings in Malaysia and Croatia in FY27?
- How will ongoing investment in AI and digital transformation influence future sales growth?
