Harvey Norman share price surges despite profit slide

Harvey Norman shares are on the move on Wednesday.

| More on:
a woman wearing fashionable clothes and jewellery checks her phone with a satisfied smile on her face in a luxurous home setting.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Harvey Norman Holdings Limited (ASX: HVN) share price is having a strong session.

At the time of writing, the retail giant's shares are up over 4% to $3.39.

Why is the Harvey Norman share price pushing higher?

There appear to be a couple of catalysts for the rise in the Harvey Norman share price today.

The first is the release of inflation data this morning, which revealed a softer-than-expected reading.

This appears to have sparked hopes that the RBA won't have to raise rates as much as feared. Though, the jury is still out on that.

In addition, this morning the company released its profit guidance for FY 2023. It said:

Unaudited, preliminary, draft accounts for the 11 months ending 31 May 2023 indicate that profit before tax and non-controlling interests excluding net property revaluations and AASB16 Leases for the consolidated entity, for the year ending 30 June 2023, is expected to be in the range of up or down 5% of $670m.

This would mean a profit before tax (excluding net property revaluations and AASB16 Leases) in the range of $636.5 million to $703 million.

How does this compare to last year?

As a reminder, in FY 2022, Harvey Norman reported a profit before tax (excluding AASB16 net impact and net property revaluations) of $942.79 million. As a result, we are looking at the retailer delivering a profit before tax of approximately 25% to 32% lower year over year.

However, judging by the performance of the Harvey Norman share price today, some investors appear to have been expecting an even greater decline.

It is worth noting that Goldman Sachs was expecting a profit before tax of $657 million, which is broadly in the middle of this guidance range.

Management also advised that its "net property revaluations for the 12 months ended 30 June 2023 are expected to be approximately $119m."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

Woman checking out new laptops.
Retail Shares

Harvey Norman shares see red on ASIC case update

This could put the saga to rest.

Read more »

A man looking at his laptop and thinking.
Retail Shares

Why this investing expert is cashing in some gains on Wesfarmers shares

The ASX 200 stock is up more than 27% over the past 12 months.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

Why today is a big day for Wesfarmers shares

Why is everyone talking about Wesfarmers shares today?

Read more »

Woman checking out new iPads.
Retail Shares

JB Hi-Fi share price lifts off on strong start to FY 2025

JB Hi-Fi held its AGM today and released its first quarter trading update.

Read more »

Two woman shopping and pointing at a bargain opportunity.
Retail Shares

Why I think this ASX 200 stock is a top buy right now

I’m bullish about this stock with global potential.

Read more »

Two happy woman looking at a tablet.
Retail Shares

Guess which ASX All Ords stock just reported a 21% revenue jump

The ASX All Ords stock has had a strong start to the new financial year.

Read more »

a fashionable older woman walks side by side with a stylish younger woman in a street setting as they both smile at something they are talking about.
Retail Shares

Why I'd start buying ASX retail shares now rather than waiting for 2025

Is it time to act before it’s too late?

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Retail Shares

I'd invest $10,000 into these excellent ASX shares for the long-term

I love finding ASX growth shares that have a compelling future with good potential earnings growth. I want to invest…

Read more »