June 9, 2020 / 11:59 PM / a month ago

Harvey Norman pays special dividend as Australia sales surge, shares jump

(Reuters) - Australia’s No.2 electronics retailer Harvey Norman Holdings Ltd (HVN.AX) declared a special dividend as it reported a near 18% jump in five-month sales at its domestic franchisees, sending shares about 8% higher on Wednesday.

The surprise announcement of a special 6 cents a share payout comes just two months after Harvey scrapped its planned interim dividend payment of 12 cents to save cash and weather a coronavirus-induced downturn. Many other Australian firms too have either nixed or deferred dividend payments.

New South Wales-based Harvey Norman said its Australian franchisees benefited as all but two of its franchised complexes remained open through the coronavirus pandemic.

Australia implemented strict social distancing rules in mid-March to contain the COVID-19 pandemic, forcing many businesses to close and brick-and-mortar store operators to largely rely on online trade.

While some restrictions have eased this month, economists say it will be a while before activity returns to pre-crisis levels.

In a trading update for all its key markets, Harvey Norman said sales among its Australian franchisees surged 17.5% in the first five months to the end of May, compared to a 0.1% rise in the first half ended December.

The second-half reporting period begins on January 1 and will end on June 30.

Shares of the company rose as much as 7.6% to a more than three-month high of A$3.820. The stock was among the top percentage gainers on the benchmark index .

Harvey Norman’s stores abroad were shut for weeks due to virus-enforced restrictions, leading to a 7.3% drop in January-May sales from New Zealand and an almost 22% slide in Singapore, where its shops are still closed.

New Zealand made up a third of the company’s total revenue for 2019, while Asia contributed nearly a fifth of sales.

Reporting by Shashwat Awasthi and Shriya Ramakrishnan in Bengaluru; Editing by Tom Hogue and Muralikumar Anantharaman

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