ASIC: Federal court dismisses Latitude, Harvey Norman’s appeals

ASIC: Federal court dismisses Latitude, Harvey Norman’s appeals

The Federal Court has dismissed appeals filed by Latitude Finance Australia and Harvey Norman regarding a previous court ruling that found the furniture retailer made false and misleading financial claims in an advertising campaign. The court's decision, handed down on Thursday, dismissed the appeal lodged last November, with reasons for the dismissal to be published at a later date [1].

The case, brought by the Australian Securities and Investments Commission (ASIC), centered on a national advertising campaign from January 2020 to August 2021. The campaign offered a 60-month interest-free and no-deposit payment method, but customers were required to take out a credit card, such as the Latitude Go Mastercard, to purchase goods. Justice Yates ruled that consumers had to enter into a "fundamentally different" financial arrangement than the one promoted, as a credit card comes with establishment fees and monthly account service fees [1].

Despite the legal setback, Harvey Norman reported a strong uplift in profitability and sales for the year ended June 30. The retailer's reported profit before tax rose 39% to $753.10 million, while profit after tax and non-controlling interests grew 47% to $518.02 million [1]. The franchising operations recorded a 25% uplift in profit before tax, driven by a 6.1% rise in aggregated franchisee sales revenue. The property segment saw profit double, supported by higher net property revaluation, while the overseas company-operated retail segment saw profit increase 18%, with growth in Ireland and Asia offsetting a decline in New Zealand [1].

Chairman Gerry Harvey attributed the strong financial performance to the retailer's diversified business model, disciplined execution of long-term strategy, and continued investment in digital transformation and in-store innovation [1].

A separate hearing will now be scheduled to determine any penalties to be imposed on Harvey Norman and Latitude [1].

References:
[1] https://franchiseexecutives.com.au/harvey-norman-profit-booms-but-retailer-loses-asic-court-case-appeal/