Harvey Norman profits up, but not enough

Clive Peeters purchase cost A$55 million and helps the company's future, Gerry Harvey claims

By David Ramli, Sydney | Monday, 30 August 2010
Harvey Norman has reported a net profit from underlying business increase of 15.8 percent to A$290.04 million (NZ$352 million) compared to the same period last year, but failed to reach market expectations.

“I am pleased with our result and we are determinedly optimistic about the 2011 financial year,” Harvey Norman chairman, Gerry Harvey, said in a statement. “Following a year of consolidation in 2010, we plan on resuming our store roll out program in 2011.

“We have a strong balance sheet and cash flow and we are well placed to take advantage of emerging opportunities.”

The statement comes after the retail giant swallowed rival chain, Clive Peeters, for $55 million (NZ$66 million) after it was rocked by accounting scandals and financial collapse.

“The purchase of the Clive Peeters and Rick Hart complexes is a strong strategic fit, adding to our existing brands of Harvey Norman, Domayne and Joyce Mayne, and gives us a complementary two brand strategy in almost every state in Australia,” Norman said.

According to the company’s annual report, net cash flow from operations reached $386.9 million (NZ$468 million) despite a strong drop in retail spending in the last two months of the financial year.