Electronics and furniture retailer Harvey Norman has reported its FY24 results, with challenges in discretionary retail contributing to a 34.7% drop in net profit after tax to $352.45 million in the 12 months to June 30. Reported profit before tax was down 30.2% to $541.69 million

The decline was felt most in the first half of the year, in which profits plummeted 45.7%, before picking up in the second half, during which profits rose a modest 1.9% compared to the second half of FY23.

Total systems sales revenue, comprising Harvey Norman's overseas company-operated sales revenue and aggregated Harvey Norman, Domayne and Joyce Mayne franchisee sales revenue in Australia, were down $330.79 million to $8.86 billion. Sales made by franchisees in Australia do not form part of the financial results of the consolidated entity.

Excluding the net impact of Australian Accounting Standards Board (AASB) 16 and property revaluations, profit before tax was down 20.6% to $540.07 million.

Harvey Norman's company-operated overseas retail segment accounted for 22% of total PBT excluding net property revaluations, with overseas retail profitability declining 14.8% to $118.54 million. Overseas retail sales were impacted by persistent macroeconomic headwinds in New Zealand that dampened consumer and business confidence, as well as ongoing cost of living and inflationary pressures in Asia and Europe.

The company's balance sheet remained strong with total assets of nearly $8 billion, including a $4.23 billion property property portfolio. Prudent working capital management across key segments delivered operating cash-flows of $686.53 million at a cash-conversion ratio of 100.4%.

In Australia, the business had 196 franchised complexes, encompassing 556 independent franchisees. FY24 Aggregated Franchisee Sales Revenue were $6.06 billion and FY24 Franchising Operations profit before tax was $273.56 million. The majority of the decline was recorded in the first half, which saw franchising operations profitibility reduced by 39.8%.

Chairman Gerry Harvey said: “FY24 has delivered strong operating cashflows of $686.53m at a cash conversion of 100.4% while maintaining a low net debt to equity ratio of 14.49%. We have nearly $8bn in total assets and solid net assets of $4.54bn. Our omni-channel strategy, bolstered by our strong brand and extensive geographical reach, will empower franchisees and company-operated stores to leverage the emerging AI-PC market, which will drive sales growth as the category grows.

"Our strategic highlights during the year include building on our digital, online and in-store offering, as well as the strategic expansion of our global store networks and targeted investments in key segments . We are excited about the recent gen-AI product cycle ad ae committed to further investing in digital initiatives to assist both our franchisees and company0operated stores in promoting Gen-AI enabled products to mainstream consumers. We are strategically positioned to capitalise on improvements in retail trading conditions and the expected growth from the home renovation cycle, new home constrcyin nd increases in net migration."