Harvey Norman Holdings Ltd reported a 4.9% increase in statutory profit before tax to $790.29 million for fiscal 2026, alongside a 3.1% rise in total system sales revenue to $9.64 billion. However, management warned that consumer confidence had softened following the May 2026 federal budget, creating a challenging retail environment.
FY26 Earnings and Profit Performance
The Harvey Norman Holdings Ltd (ASX: HVN) share price drew fresh attention after the company reported a 4.9% increase in statutory profit before tax to $790.29 million for the 2026 fiscal year and announced a fully-franked final dividend of 13.0 cents per share. The retailer posted basic earnings per share of 42.41 cents, growing 2.0% from the previous year.
Total system sales revenue climbed 3.1% to $9.64 billion, with $6.6bn of franchisee revenue coming from Australia. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 5.0% to $1.18 billion. Meanwhile, underlying profit before tax—excluding AASB 16, property revaluations, and penalties—advanced 10.9% to $654.69 million.
The company also declared a fully-franked final dividend of 13.0 cents per share, bringing the full-year dividend to 27.5 cents per share, representing a 3.8% increase for FY26.
Cost Pressures and Consumer Confidence Headwinds
Despite reporting solid top-line figures, retail pioneer Harvey Norman pointed to mounting economic pressures during the second half of the fiscal year. Retail conditions became more variable as discretionary spending slowed down following a strong start to trading.
“Consumer confidence softened further following the May 2026 federal budget, resulting in more cautious discretionary spending,” the company said in its latest market update, taking a thinly veiled swipe at the budget.
According to the ANZ-Roy Morgan consumer confidence index, household moods have increased from 66.4 to 77.5 since the budget was announced, though a score of 100 or above counts as optimistic about the future. The company noted that the Albanese government pushed through changes to capital gains taxes and negative gearing, announced in its May budget, calling it a once-in-a-generation overhaul to the system. From July 1, 2027, the current 50 per cent capital gains tax discount will be replaced with inflation-adjusted indexation. Additionally, a new minimum 30 per cent tax rate will apply on capital gains from July 1, 2028, ending the incentive for asset-rich but cash-poor Aussies to sell assets when their income falls to maximise tax advantages. Negative gearing has also been scrapped for those trying to get into the market on existing dwellings, while current landlords and anyone who builds a new property can still use negative gearing.
Beyond fiscal policy shifts, Harvey Norman stopped short of completely blaming the government, also highlighting a challenging second quarter led by higher fuel and energy costs, an increase in freight-related expenses, and three consecutive interest rate hikes. Other Australian retailers including JB Hi-Fi also noted the challenging environment when they announced their results. During an earnings call in mid-August, JB Hi-Fi chief executive Nick Wells said he was optimistic that huge sales periods, including Black Friday, would help pick up sales after a slow start to the new financial year caused by higher rates and fuel prices. Harvey Norman chairman Gerry Harvey noted that disciplined cost management and sales growth enabled the business to absorb these inflationary pressures and continue to invest in expansion initiatives, adding that the full-year sales result reflects a strong first half and a resilient performance across the Harvey Norman brands.
International Expansion and Balance Sheet Strength
International operations proved to be a major bright spot for the retailer. Overseas company-operated retail profit before tax jumped 23.4% to $135.72 million. Harvey Norman continued its international expansion, particularly in the UK, where its platform is being scaled for long-term growth.
Asset strength remains a key feature of the business. Total assets increased 5.7% to $8.85 billion, with total assets approaching $9 billion and net assets approaching $5 billion, alongside substantial property ownership and low gearing. Operating cash flows were robust at $537.22 million, underpinning ongoing investments, dividend payments, and future initiatives.
“FY26 delivered growth in operating earnings, continued international expansion and strong franchise profitability,” company chair Gerry Harvey commented. “With total assets approaching $9 billion, net assets approaching $5 billion, substantial property ownership and low gearing, we remain well positioned to deliver long-term sustainable growth for our shareholders.”
Strategic Outlook and Market Position
What is next for Harvey Norman? The company is focused on leveraging its growing international presence, especially in established markets like New Zealand, Asia, and Europe. Management expects positive momentum to continue as the company opens new stores, invests in Next Gen-AI product categories, and maintains attention to cost management. With a strong asset-backed balance sheet and conservative gearing, the business aims to fund further expansions while supporting long-term value creation for shareholders.
The earnings report arrives as the company’s share price underperforms the S&P/ASX 200 index (ASX: XJO) with a decline of around 27% over the past 12 months.
