Reporting Season

Two consumer goods retailers with contrasting interim results today

Fri 25 Feb 22, 4:46pm (AEST)

Stocks in article


Share article

Key Points

  • Two consumer goods retailers with totally different 1H FY22 stories to tell today
  • and Harvey Norman

While investors gave Harvey Norman’s (ASX: HVN) gritty half year result the thumbs up (up 3.71%) this morning, it’s online counterpart (ASX: KGN) initially fell by double-digits after positing a sizable net loss, albeit on the back of some abnormals the market clearly wasn’t expecting.

Kogan explained

Firstly, let’s take a look at why Kogan was down -12.48% after lunch despite delivering record sales. The market should have known something was up when the online retailer went into a trading halt citing further announcements pending.

Today’s dismal result follows in the wake of a half-year trading update – revealing supply chain disruptions and higher costs – which sent the share price to a two-year low in late January.

Having reported a net profit of $35m a year earlier, Kogan today declared a- $11.8m interim net loss after being hit by $13.6m in compensation expenses due to the award of options, and provisions of $10.4m taken to make further payments to NZ online retailer Mighty Ape, which Kogan acquired in December.

Highlights of Kogan's 1H FY22 result

  • Mighty Ape, which specialises in gaming and entertainment products, contributed $93.8m of revenue and $21.6m of gross profit in the half year.

  • Kogan’s expenses rose in the half, with the company citing covid-related disruptions.

  • Gross sales jumped 9.4% to a record $698m.

  • No dividend was paid.

  • A 1.3% lift in revenue to $419.5m, due entirely  to acquisitions, with its core operations going backwards during the half.

  • business reported a -17.3% decline in revenue to $325.7m.

  • 10.4% year-on-year increase in active customers to 3,314,000.

  • 176% lift in Kogan First loyalty customers to over 274,000 subscribers.

Consistent with prior years, Kogan did not provide earnings guidance for second half FY22.


Kogan's share price has demonstrated underlying weakness over the past three months.

Harvey Norman

While consumer electronics, appliances and furniture retailer’s first half profit before tax fell 4.9% to $612.2m, the market took some comfort from knowing the result was 103.3% up on first half FY20, which clearly exceeded expectations.

After a slow start that was hampered by closures in Sydney and Melbourne, Harvey Norman noted that trade across Australia accelerated as lockdowns lifted late in the first half.

Reported profit after tax and non-controlling interests fell -6.7% to $430.9m in the first half which was a major beat to Bell Potter expectations.

Chairman and co-founder Gerry Harvey noted a strengthening momentum in the home renovation market and heightened consumer demand is driving sales across key home, lifestyle and tech product categories with the ‘home’ continuing to be the focal point for consumer spending.

Highlights of the Harvey Norman 1H FY22 result

  • Sales at franchised stores in Australia declined -6.2% to $4.91bn, but up on consensus expectations of $3.40bn.

  • Australian franchising operation’s profit fell -23.7% to $292.9m.

  • Same-store sales growth across Australian franchisees was -8.4% lower.

  • Australian franchisee operating margins fell from 10.22% to 8.53%.

  • Inventories rose almost by $72m to nearly $56m.

  • Franchisee receivables was up more than $97m.

  • Cashflow was up 44%, on the back of lower inventory build up.

Commenting on the result, Gerry Harvey said:

“This is a solid result given the unprecedented COVID-19 issues encountered by the consolidated entity during this half.

We operate an integrated retail, franchise, property and digital business across eight countries – and our points of difference have proven to be our strengths validating the continued investment in our three main pillars:

  • 108 company-operated retail stores overseas.

  • 194 franchised complexes in Australia across all key product categories within the Home, Lifestyle and Tech markets.

  • A resilient $3.54bn freehold property portfolio and a $1.12bn leasehold portfolio that anchors a strong balance sheet.”


The Harvey Norman share price has outperformed the broader market over the past three months.



Written By

Mark Story


Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

Get the latest news and media direct to your inbox

Sign up FREE