UPDATE: JB Hi Fi Share Up 14.54% After Record Result, The Good Guys Also Deliver
JB Hi-Fi shares have climbed 14.54% in early trading after the consumer electronics and appliance retailer reported that revenues are up 5.1% per cent to $4Billion for the first half of the 2019/2020 financial year.
Profits were also up 8% due in part to a “strong Christmas quarter” according to Group CEO Richard Murray.
Sales overall grew by 5.1% to $2.72 billion, with comparable sales up 4.4%. The key growth categories were Communications, Audio, Computers, Visual and Accessories. Online sales grew 18.3% to $170.8 million or 6.3% of total sales.
JB Hi Fi Commercial business recorded strong sales growth. Gross profit increased by 4.8% to $600.8 million resulting in a gross margin of 22.1%. CODB was 13.9%
down 10 bps.ffssssss
The business’s low CODB remains a competitive advantage and is maintained through a continued focus on productivity, minimising unnecessary expenditure and leveraging scale said Murray.
Sales growth, combined with cost control and lower depreciation, drove solid earnings growth. EBIT was up 6.5% to $204.5 million with EBIT margin up 10 bps to 7.5%.
The Good Guys also delivered growth with comparable sales climbing 0.6 per cent despite previously struggling to grow sales. This is attributed to a major restructure of stores and a rationalisation of brands.
TGG sales grew by 1.5% to $1.15 billion, key growth categories were Dishwashers, Floorcare, Cooking, Communications and Computers.
Online sales at TGG were up 12.6% to $79.6 million or 6.9% of total sales with strong sales on The Good Guys website partially offset by a decline in third
party marketplace sales.
Gross profit was $237.6 million with gross margin up 8 bps to 20.7%, improvements in gross margin partially offset by changes in sales mix at the appliance retailer.
“The results prove that JB Hi Fi are among the best retailers in the market today” said one analyst, fuelled largely by online sales growth and increased trade in its communications, audio, and computers divisions.
“We are pleased to deliver positive sales and strong earnings growth in the first half of [the 2020 financial year], with sales improving throughout the half and culminating in a strong Christmas quarter,” chief executive Richard Murray said.
“In a competitive environment we remained focused on growing sales and market share in a sustainable manner whilst continuing to evolve the business.”
New Zealand was the only dark spot for January trade, with comparable sales at the company’s 14 stores dropping 1.6 per cent, a sizable downturn when compared to the 4.1 per cent growth seen last January.
Mr Murray said while the company was pleased with January trade, much of the growth was being seen in low margin categories, and customers were preferring to buy during discounting periods.
The company revised its full-year guidance upwards, telling investors it now expects sales for the 2020 financial year to be $7.33 billion, an increase of 1.1 per cent from its previous $7.25 billion forecast.
Chairman Greg Richards also announced his retirement, with current board member and former Myer and David Jones executive Stephen Goddard to take his place at the end of the financial year.
An interim dividend of 99 cents, up 8.8 per cent from the 91 cents delivered last year, will be paid to shareholders on March 6.