Harvey Norman Holdings Limited (ASX: HVN) has released a trading update for the first couple of months of FY21.
Harvey Norman generates earnings from a number of different sources. It has company-operated stores in New Zealand, Slovenia, Croatia, Ireland and Northern Ireland, majority-owned controlled company-operated stores in Singapore and Malaysia and independent Harvey Norman, Domayne and Joyce Mayne franchised complexes in Australia.
Trading update
Harvey Norman said that aggregated sales revenue for the period from 1 July 2020 to 17 September 2020 grew 30.6%.
In local currency terms, Australian franchisee sales grew by 33.8%, New Zealand sales grew by 21.9%, Slovenia and Croatia sales went up 26.4%, Ireland sales went up 60.7%, Northern Ireland sales rose 22.5%, Singapore sales climbed 0.3% and Malaysia sales grew 13.1%.
A new company-operated store was opened in Galway City in Ireland on 22 July 2020 and a new company-operated store in Seletar Mall in Singapore on 15 September 2020.
Unaudited preliminary profit before tax for July and August 2020 rose 185.8% to $178.1 million.
Summary
This was a really strong update from Harvey Norman. Underlying profit has risen extremely strongly. The question is – how long will this last? Short term strength won’t keep the share price higher forever if sales fall back to a more normal level.
For me, other ASX growth shares are better ideas because they are clearer long term paths to growth – I’m thinking of a growth name like Pushpay Holdings Ltd (ASX: PPH).
