JB Hi Fi Profits Up 10.9% Tablet Sales Hurt Revenues
The Melbourne based Company has lifted its full-year profit 10.29% for the year ending June 30 2014.
The retailer reported a net profit of $128.36 million which was an increase on the $116.38m for the previous corresponding period.
The result was in line with the Companies guidance which was tipped as being a profit of between $126m and $129m. The result also exceeded the consensus forecast from analysts surveyed by Bloomberg, who expected net profit of $127.7m.
Despite this shares in the Company fell 7.8% to $17.85% shortly after the opening bell.
CEO Richard Murray has warned that sales in the first half of fiscal 2015 will be hit by reduced tablet sales, he told ChannelNews recently that the Company was confident that new PC’s a move to hybrid’s and the launch of the Microsoft Surface Pro 3 would lift PC sales in the last quarter and that increased sales from an expansion of their appliance operation would “be a contributor” going forward.
Analysts believe Murray may look for acquisitions and expand the commercial division as Dick Smith moves to take on the division which is tipped to have revenues of around $250M.
“The company is the best in class retailer in electronics, but the new product pipeline across the electronics industry looks weak and price deflation will result in weak sales,” said Citigroup analyst Craig Woolford in a note last week.
Revenue in the period jumped 5.3 per cent to $3.484 billion. In May, the retailer lowered its sales forecast from a 6 to 8 per cent increase on the previous year to the 5.3 per cent target it met in today’s results.
The results were the first by Richard Murray in his new role as CEO of JB Hi Fi.
He stepped up from being CFO to CEO replacing Terry Smart the former CEO who was able to transition the business to Murray two months ahead of his scheduled exit date.
Murray said that the group who are also expanding their commercial operations started the new financial year on the back foot, with same store sales in July down 5.5 per cent.
“We anticipate sales in the first half of fiscal 2015 will continue to be impacted by reduced tablet sales, however we are positive about the pipeline of new products to be released and as a result we expect solid sales growth for the year.”
The retailer continues to back its play for the $4.6 billion home appliances market, saying its JB Hi-Fi HOME brand represents “a significant growth opportunity” for the company.
At the end of the 2014 financial year, JB Hi-Fi had 22 Home stores after opening one new store and converting 13 existing stores during the period.
In fiscal 2015, the electronics retailer anticipates opening four new Home stores and will convert a further 26 existing stores, bringing the total number of HOME stores to 52 by the end of the year.
This is broadly in line with the retailer’s aim to have 75 Home stores open by the end of fiscal 2016.
Mr Murray said the Home store expansion is one year ahead of original expectations with results to date highlighting the opportunity for the group to leverage the strength and trust in the JB Hi-Fi brand into the appliance categories.
In the year, online sales grew 13.9 per cent to represent around 2.2 per cent of total sales, compared to 2 per cent in fiscal 2013.
In June, the company completed an on-market buy-back of 1.4 million ordinary shares — at a cost of $25.8m — in order to offset the dilutionary impact of shares issued to employees under the company’s share option plans in fiscal 2014.
JB Hi-Fi today announced it will undertake a further on-market share buy-back of up to 645,765 ordinary shares — or around 0.65 per cent of the availbe stock.