JB Hi-Fi reaffirms guidance

JB Hi-Fi (JBH) has reaffirmed full-year guidance, saying it expects total sales to increase by between 6-8%.

The group has also continued to control costs while maintaining high levels of service, its chairman Greg Richards says.

"Our low cost culture at JB Hi-Fi enables us to maintain the lowest cost of doing business of, not only any major listed Australian retailer, but also of the company's comparable international peers," Mr Richards told the group's annual general meeting.

He noted a recovery in the group's share price over the last 12 months as financial results improved.

"Shareholders who invested in the company's IPO in October 2003 have achieved an annual compound rate of return of 28.2% to October 29, 2013, compared to 5.1% on the ASX 200 Accumulation Index over the same period," he said.

Chief executive officer Terry Smart said the market remained very competitive in fiscal 2013, but the group's gross margin improved as it cycled through the unsustainable discounting in the second half of fiscal 2012.

He echoed Mr Richards' comments about the low cost of doing business, saying store wages remained flat as a percentage of sales, even adjusted for the Fair Work Australia award increase on July 1, 2012.

First quarter sales increased by 8.1%, with comparable sales growth of 2.9%, he said.

The group opened 13 new stores and closed three during fiscal 2013.

"To maximise new store opportunities, we continue to apply stringent store selection criteria to potential new sites to ensure that they offer JB Hi-Fi a high level of foot traffic and convenient access for customers," Mr Smart said.

He said the group leverages both its bricks and mortar stores and its online presence, with online sales increasing by 29.8% in fiscal 2013.

Sales directly through the website make up two% of total sales, he said.

The group also expanded its digital offering from music streaming to include ebooks and a video download service in fiscal 2013.

Mr Smart said the group sees the potential for around 50 JB Hi-Fi Home stores in the next three years, after converting eight stores by the end of fiscal 2013.

"We are excited about the sales growth opportunity that the circa $4.6 billion home appliance market presents," he said.

"The trial Home stores demonstrated how JB Hi-Fi can integrate the home appliance categories within its existing model while maintaining the unique JB Hi-Fi brand personality."

He noted the commercial business grew from a relatively small base, with sales up by 68.7% in fiscal 2013.