Highlights

• Total system sales reached A$9.64 billion in FY26, up 3.1 per cent, combining Franchisee and company-operated sales.

• Overseas company-operated retail profit before tax rose 23.4% to A$135.72 million.

• Franchising operations delivered profit before tax of A$345.18 million, broadly flat on the previous year.

• The Federal Court ordered a A$35 million penalty over misleading advertising, and a related class action could follow.

How is Harvey Norman (ASX:HVN) holding up as Australian households tighten their belts? Its latest annual results suggest the answer lies increasingly outside its home franchise network. Overseas stores and a large property portfolio did much of the heavy lifting in the year to 30 June 2026, while sales through Australian franchisees slowed in the second half.

With the final Dividend paid today, 12 November, and the Annual General Meeting set for 25 November, shareholders are about to get their first detailed look at trading in the 2027 financial year. In recent years the AGM has been where the company reports sales for the year to date, making it a key event.

A hybrid Business model

Harvey Norman Holdings is not a conventional retailer. The listed company earns franchise fees and other income from them, rather than booking their sales as its own revenue.

Overseas, the picture is different. In New Zealand, Singapore, Malaysia, Ireland, Northern Ireland, Slovenia, Croatia and, more recently, Great Britain, the company owns and operates its stores directly.

That structure explains why the headline numbers can look different from those of rivals. Total system sales, which combine franchisee and company-operated sales, reached A$9.64 billion in FY26, up 3.1%. Of that, Australian franchisees accounted for about A$6.58 billion and overseas company-operated stores about A$3.05 billion.

What the FY26 result showed

Results released on 28 August 2026 showed reported profit before tax of A$790.29 million, up 4.9%. Net profit after tax attributable to shareholders rose 2.0% to A$528.46 million, and Basic Earnings Per Share also rose 2.0% to 42.41 cents.

On that basis, profit before tax rose 10.9% to A$654.69 million and underlying net profit rose 8.6% to A$437.81 million. Investors should note this is management's own measure rather than a statutory one.

Directors declared a fully franked final dividend of 13 cents per share, taking the full-year payout to 27.5 cents, up from 26.5 cents. Net Assets rose 2.0% to A$4.94 billion, and net Debt to Equity stood at 18.81%.

A tale of two halves at home

The Australian franchise network had a more uneven year. Over the full year, franchisee sales rose 2.4%.

The franchising operations segment delivered profit before tax of A$345.18 million, broadly flat on the previous year, on Revenue up 4.3% to A$1.09 billion. Chairman Gerry Harvey said FY26 delivered growth in operating earnings, continued international expansion and encouraging franchise profitability.

The start of FY27 was mixed. Australian franchisee sales fell 3.4% in July 2026, which the company attributed partly to timing, including a smartphone launch moving from July to August. Comparable written sales, which capture orders not yet delivered, then rose 3.8% between 1 and 24 August.

Overseas stores and property carry the load

The strongest growth came offshore. Profit before tax from overseas company-operated retail rose 23.4% to A$135.72 million. Excluding the costs of building the business in Great Britain, established international operations earned A$166.93 million, up 25.2%.

The UK remains an Investment phase. The company is building a base in the West Midlands and has finalised a full-format store in Northern Ireland, with Mr Harvey describing the strategy as building "a scalable platform for long-term growth". Start-up losses there are a drag on group earnings for now.

The ASIC penalty

The result also absorbed the cost of a long-running regulatory case. In July 2026 the Federal Court ordered Harvey Norman to pay a A$35 million penalty, and Latitude Finance Australia A$20 million, over misleading Advertising of a 60-month interest-free promotion that ran between January 2020 and August 2021.

ASIC had alleged the advertisements did not make clear that customers needed a Credit card such as the Latitude GO Mastercard, and would pay account fees. Harvey Norman had previously provisioned A$16.2 million and said it did not intend to mislead and apologised to the court and customers. A related class action is also being promoted by plaintiff lawyers, and its outcome is uncertain.

What to watch at the AGM and beyond

The AGM trading update will be the main near-term focus. A year ago, the update covering 1 July to 20 November 2025 showed Australian franchisee sales up 6.5% and aggregated group sales up 9.1%, a high base for this year's comparison.

Investors will be looking for whether the August improvement in written sales held through spring, how the overseas businesses are tracking, and progress on reducing UK start-up losses. The company does not provide formal earnings guidance.

Against that, the group's diversified earnings base and property-backed Balance Sheet give it more than one lever to pull when Australian retail conditions are difficult.