Harvey Norman Profits from Brisk TV, Laptop Sales

Australian electrical goods and furniture retailer Harvey Norman Holdings beat forecasts with a 28% rise in year profit on strong sales of flat-screen TVs and laptops, sending its shares up more than 6%.

With government data on Friday showing surprisingly strong growth in July retail sales, analysts said conditions remained good for Harvey Norman to continue its sales growth.

"Consumers are feeling fairly wealthy at the moment," said CommSec senior analyst Grant Saligari. "Employment is high, incomes are growing reasonably solidly; as long as those conditions hold, you should see good retail conditions right through calendar 2008."

Harvey Norman, which has about 190 franchised stores in Australia, said underlying net profit after tax rose to A$260.35 million (US$211.6 million) in the year to end-June from A$203.4 million in the previous year.

Petrol prices and interest rate increases were potential brakes on sales, but uncertainty over the U.S. property and lending markets was unlikely to impact spending in the short term, Saligari said.

Earlier this month, rival retailer JB HiFi reported a 56% rise in its full-year profit.

"Worldwide demand for technology and lifestyle products appears to be insatiable," Harvey Norman said in a statement, adding it was well placed to take advantage of emerging opportunities.

Harvey Norman has been expanding overseas, where it has 53 stores, including 24 in New Zealand, 14 in Singapore and a handful in Slovenia. It also plans to open four stores this year in Ireland, adding to the 10 it already has.

Chief Executive Gerry Harvey had signaled an interest earlier this year in acquiring the Officeworks business supplies chain from Coles Group, but the entire Coles group was sold to conglomerate Wesfarmers.

Harvey Norman's net profit from continuing operations rose to A$324.1 million from A$217.75 million. It posted a A$72.5 million gain on the sale of its stake in Rebel Sport to private equity firm Archer Capital. 

Harvey Norman shares have risen 40% this year, outperforming a 9.3% gain on the broader market.