JB Hi-Fi's $116m profit defies slump

Strong and sustained sales momentum that took hold after Christmas has helped JB Hi-Fi defy the general downturn across the retail sector to post its first full-year profit growth in three years.

The raised profit, up 11.2 per cent to $116.4 million, was held back slightly by lower comparable sales in New Zealand and a jump in the cost of doing business, namely higher wages bills driven by Fair Work Australia award increases as well as fatter rent bills.

The full-year performance, built on a 5.8 per cent lift in sales to $3.308 billion, surpassed analysts' expectations and the market rewarded the retailer, sending its shares more than 4 per cent higher, before closing up 60¢, or 3.2 per cent, at $19.12 - a 27-month high.

There was also good news in the outlook statement for investors, with a pick-up in sales that hit JB Hi-Fi stores in January pushing into the new financial year, with sales growth for July touching 8 per cent and like-for-like growth up 2.2 per cent.

JB Hi-Fi said a new pipeline of products and gadgets, such as TVs and gaming consoles, should continue to drive interest and growth in the wider electronics market, with the retailer now tipping sales for fiscal 2014 to rise by between 6 per cent and 8 per cent on the previous year.

The positive growth comes at a time when most retailers are suffering an earnings downturn as consumers refuse to spend.

The electronics and home entertainment group was the first large retailer to report full-year earnings, but not all are expected to surprise the market on the upside.

Deutsche Bank analyst Michael Simotas said the positive outlook statement implied better 2014 financial year sales than the market was expecting, although with the stock performing well recently he believed this was largely in the price at current levels.

"Sales were slightly ahead of our expectations due to higher contribution from new stores, gross margin was in line, but cost of doing business was higher," he said.

JB Hi-Fi declared a final dividend of 22¢ a share, fully franked, taking total dividends for the year to 72¢.