Pre-tax profits at the Irish arm of consumer electronic and furniture retailer, Harvey Norman last year declined by 23% to €13.1m.
New accounts filed show that Harvey Norman Holdings (Ireland) Ltd recorded the €4m drop in pre-tax profits as revenues increased by 0.8% from €420.72m to €424.07m in the 12 months to the end of June 2023.
The directors state that the increase in revenues was mainly due to the contribution of a new 42,000 sq ft Fonthill store in Dublin, the firm's 16th in the Republic, which opened in July 2022.
The directors state that when compared to pre-pandemic sales in 2019 of €236m, there has been significant growth of €187.9m or 79.6% increase in sales since then.
The directors state that since the pre-pandemic 2019 financial year, "the brand has gone from strength to strength and has significantly grown market share in all categories".
They state that the 2023 financial year "is the six straight year of profitability".
Highlighting the reason behind the drop in profits, the directors state that the operating expenses for 2023 were inclusive of company brand licensing fees payable under a revised global transfer policy adopted this year.
The directors state that the profitability of the Irish group was reduced by €2.59m due to fees payable under this policy.
The directors further state that the 16 stores in the Republic "performed strongly with market share gains across a number of key categories".
They state that "the supply chain and transportation costs which hampered the business in the previous year have decreased and returned to acceptable levels and improvements in margins in the furniture has started".
They state: "We expect these improvements to continue in the next 12 months."
They state that the opening of the Fonthill store in Dublin and the new distribution centre show that "the company continues to see opportunities in the Irish market which will grow sales and profitability in the future".
On June 30th 2023, the group purchased a retail park at Eastgate Retail Park that comprised 11 commercial units at Little Island, Cork.
They also state that after one year of ownership, the rental streams at Eastgate Retail Park have increased and the debt is being paid down per schedule.
The accounts state that on the date, the Eastgate Retail Park property had a book value of €26.23m.
Numbers employed by the group last year increased by 21 from 1,417 to 1,438 as staff costs increased marginally from €55.86m to €56.5m.
Pay to directors decreased from €699,203 to €687,549 made up of €670,923 in emoluments and €16.626 in pension contributions.
The profits last year take account of non-cash depreciation charges of €5.4m and operating lease rentals of €16.32m.
The group's operating profits declined by 11% from €17.48m to €15.6m and interest charges of €2.49m resulted in the pre-tax profit of €13.1m.
The company recorded post tax profits of €10.57 million after incurring a corporation tax charge of €2.54m.
The group also operates two stores in Northern Ireland and the revenues for 2023 were for the Republic and Northern Ireland.
At the end of June 2023, the group had shareholder funds of €63.7m. The group’s cash funds increased from €1.5m to €8.43m.
Reporting by Gordon Deegan
