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.
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.
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.