Harvey Norman has reported a challenging retail environment marked by a decline in consumer spending across Australia, with conditions worsening since the release of the federal budget earlier this year. The company’s co-founder Gerry Harvey pointed to broad-based reductions in foot traffic and sales affecting most retail sectors, except for chemists and pet stores, which he identified as relatively resilient.
“Across Australia, regardless of the retailer, there is a noticeable drop in customers entering stores, leading to weaker consumer spending,” Harvey said. He highlighted that businesses dealing in consumer goods such as JB Hi-Fi, The Good Guys, Harvey Norman, and furniture retailers have all experienced a downturn over the past six months, with increased community stress and frustration contributing to the atmosphere.
Harvey Norman’s full-year financial results released on Friday illustrate the impact of these trading conditions. Sales and earnings showed strength early in 2026 but weakened in the second half of the fiscal year, a trend that extended into July where comparable sales declined 3.4 percent in Australia and 4.2 percent in New Zealand. The company also operates stores in Singapore, Ireland, and the United Kingdom. Despite this, Australian sales showed signs of improvement in August.
Looking ahead, Harvey expressed skepticism that the retail environment in Australia will improve quickly, citing ongoing inflationary pressures and speculation surrounding potential interest rate increases following the Reserve Bank’s decision to keep rates steady at its August meeting. With trimmed mean inflation at 3.6 percent in July, there is still a possibility of a rate hike in late September.
Harvey Norman reported a 2 percent increase in full-year profit, reaching $528.46 million, alongside a 3.1 percent rise in revenue to $9.64 billion. The dividend was slightly reduced to 13 cents per share from 14.5 cents, payable in November. The company’s results included an $18.8 million charge from regulatory penalties related to proceedings with the Australian Securities and Investments Commission (ASIC), as well as escalating losses at its two new UK stores, which amounted to just over $3 million.
The company’s property holdings, valued at $4.8 billion last year, provide a significant buffer amid the difficult conditions. Pre-tax profit stood at $790.3 million, up 4.9 percent but slightly below market expectations. Analysts have attributed the shortfall to weaker store margins in Australia and increased losses in the UK. Following the results, Harvey Norman shares fell 1.8 percent, closing at $4.42.
Harvey emphasized the company’s solid financial foundation and international growth prospects. “Fiscal 2026 delivered growth in operating earnings, continued international expansion, and strong franchise profitability,” he said, noting total assets of near $9 billion, net assets approaching $5 billion, substantial property ownership, and low gearing.
The overseas retail segment showed robust growth, with profit before tax rising 23.4 percent to $135.7 million. Excluding the UK expansion efforts, established international operations increased profit before tax by 25.2 percent to $166.9 million.
Despite recording a $31.2 million loss in the UK in fiscal 2026—higher than the $23.4 million loss of the prior year—Harvey and CEO Katie Page remain optimistic about the country as a growth market. The company operates two stores in England, with plans for further expansion. Harvey outlined a strategy in which losses are expected to decrease as the store count rises, anticipating profitability once a third store is established.
Citi analyst Adrian Lemme remains cautious, forecasting a slowdown in Australian sales and continued margin pressures amid a subdued consumer environment.