How Does Harvey Norman Company Work?

In Australia, the company primarily functions as a franchisor, granting licenses to independent proprietors who manage individual stores. Internationally, it operates company-owned retail outlets in markets such as New Zealand, Singapore, Malaysia, Slovenia, Croatia, Ireland, and the United Kingdom. This dual approach allows for flexibility in market penetration and operational control.

The company's value proposition is built on offering a comprehensive range of quality products supported by extensive after-sales service. An omni-channel retail strategy integrates online and physical shopping experiences, allowing customers to browse digitally and purchase either online or in-store, where they can engage with products and receive expert advice.

The franchise model in Australia allows franchisees to leverage central branding, marketing, and supply chain support. This structure also fosters local entrepreneurship, with franchisees often engaging in community support through local clubs, schools, and charities, and collaborating with local media.

A significant aspect of Harvey Norman's operations involves its substantial property portfolio. The consolidated entity owns 97 franchised complexes and associated warehouses in Australia, representing 49% of its total property assets. These properties are leased to franchisees and external parties, generating a consistent rental income stream.

Established in 1982, Harvey Norman rapidly grew its presence across Australia. International expansion followed, with entry into New Zealand in 1997 and subsequent operations in several other countries, demonstrating a consistent growth trajectory.

A key strategic move is the company's substantial investment in its property assets. By FY24, the total asset base neared $8 billion, including a $4.23 billion property portfolio, securing prime retail locations and generating rental income.

FY24 presented macroeconomic challenges, impacting net profit after tax, which fell by 34.7% to $352.45 million. Overseas retail profitability also saw a decline of 14.8%, attributed to cost-of-living pressures and interest rate hikes.

Despite market challenges, the company maintained strong operating cash flows of $686.53 million in FY24, with a cash conversion rate of 100.4%. The focus remains on its omni-channel strategy and capitalizing on emerging markets like AI-PCs.

Harvey Norman is a leading retailer in Australia for computer hardware and software. As of February 28, 2025, its international footprint includes 44 stores in New Zealand and 37 in Malaysia, with expansion plans in both markets. This demonstrates a key aspect of how Harvey Norman works, leveraging its Harvey Norman retail strategy across diverse geographies.

The company faces macroeconomic pressures, including inflation impacting consumer spending, which led to a 34.7% decline in net profit after tax in FY24. The ongoing shift to online retail and regulatory changes, such as New Zealand's tax law update in April 2024, also present challenges to its Harvey Norman business model.

Future growth is targeted through investments in digital initiatives and AI, particularly in the AI-PC market. Expansion in Malaysia, aiming for 80 stores by 2030, and new developments in Croatia and the UK are key strategic priorities. This highlights how Harvey Norman manages its franchise system and distribution channels.

Harvey Norman's financial stability is supported by nearly $8 billion in total assets and $4.54 billion in net assets as of FY24. The company anticipates a sales and earnings rebound in FY25, driven by potential Australian government initiatives and product innovation, aiming for pretax margins to recover to around 16% by fiscal 2026.