Retail sales growth at Harvey Norman slowed following the May federal budget and mounting cost-of-living pressures, according to a market update released by the company.
Harvey Norman Sales Results and Financial Performance
Harvey Norman reported a 3.1 percent rise in total sales to $9.6bn, backed by $6.6bn in franchisee revenue from Australia, according to the company’s financial update. Net profit increased by 15.2 percent year-on-year during the first half, supported by resilient household budgets ahead of the Christmas trading period.
“The full-year sales result reflects a strong first half and a resilient performance across the Harvey Norman brands as retail conditions became more variable during the second half,” Harvey Norman chairman Gerry Harvey said in the market update. Disciplined cost management and sales growth allowed the company to absorb inflationary pressures and fund ongoing expansion initiatives.
Consumer Confidence Shifts After Federal Budget
Consumer sentiment dipped following the federal budget before showing modest recovery, according to the ANZ-Roy Morgan consumer confidence index. Household moods rose from 66.4 to 77.5 following the budget announcement, though the index remains below the 100-point threshold required to signal long-term optimism about the future.
Other Australian retailers experienced similar headwinds. JB Hi-Fi chief executive Nick Wells noted during a mid-August earnings call that high interest rates and elevated fuel prices created a challenging environment for retail trading at the start of the new financial year. Wells expressed optimism that major sales events, such as Black Friday, would help accelerate customer demand.
Federal Budget Tax and Negative Gearing Overhauls
The federal budget introduced significant changes to capital gains tax and negative gearing policies, which the Albanese government described as a generational overhaul. Effective July 1, 2027, the current 50 percent capital gains tax discount will be replaced with an inflation-adjusted indexation method.
Beginning July 1, 2028, a new minimum 30 percent tax rate will apply to capital gains, removing tax incentives for asset-rich, cash-poor property owners who previously timed sales to coincide with lower personal income brackets. Additionally, negative gearing rules were altered to restrict access for buyers purchasing existing dwellings, while current landlords and builders of new properties retain eligibility.
Did you know? According to the ANZ-Roy Morgan consumer confidence index, a score above 100 indicates that consumers feel optimistic about the economic future, while readings below that threshold reflect caution among households.
Frequently Asked Questions
Why did Harvey Norman sales slow down?
According to Harvey Norman’s market update, sales slowed due to softer consumer confidence following the May federal budget and ongoing cost-of-living pressures affecting discretionary spending.
What changes were made to capital gains tax in the budget?
The federal government announced that the 50 percent capital gains tax discount will be replaced with inflation-adjusted indexation starting July 1, 2027, followed by a minimum 30 percent tax rate on capital gains from July 1, 2028.
How does the change to negative gearing affect property buyers?
Negative gearing has been scrapped for buyers purchasing existing dwellings. However, current landlords and individuals who construct new properties are still permitted to use negative gearing.
How did other retailers perform in the current economic climate?
Other major Australian retailers, including JB Hi-Fi, reported a challenging start to the financial year due to higher interest rates and fuel prices, though executives anticipated sales recovery during upcoming retail events like Black Friday.
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