Sector's surprise package is on song
The raised profit, up 11.2 per cent to $116.4 million, was held back slightly by lower comparable sales in New Zealand and an elevation in the cost of doing business, namely higher wages, driven by a Fair Work Australia award increase as well as fatter rental bills.
The full-year performance, built on a 5.8 per cent lift in sales to $3.308 billion, was ahead of analyst 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 the sales pick-up pushing into the new financial year. Sales growth for July touched 8 per cent and like-for-like growth was up 2.2 per cent.
JB Hi-Fi said a new pipeline of products should continue to drive interest and growth in the wider electronics market, tipping sales for this financial year to lift by between 6 per cent and 8 per cent on the previous year.
JB Hi-Fi was the first large retailer to report its full-year earnings, with other retailers to follow in coming weeks. However, not all are expected to surprise the market on the upside.
Deutsche Bank analyst Michael Simotas said the positive outlook statement implied better sales in this financial year than the market was expecting, although with the stock performing well recently he believed, the gains were largely priced in.
"Broadly speaking, 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," Mr Simotas said. "Notwithstanding this, the group expanded EBIT [earnings before interest and tax] margin by 21 basis points."
JB Hi-Fi boss Terry Smart said the retailer would open a dozen new stores, converting 10 current stores to its new Home appliances concept format.
The company declared a final dividend of 22¢ a share, fully franked, taking total dividends for the year to 72¢ a share.
Frequently Asked Questions about this Article…
JB Hi‑Fi reported full-year profit up 11.2% to $116.4 million on sales that rose 5.8% to $3.308 billion.
Strong and sustained post-Christmas sales momentum, a pipeline of new products and higher contribution from new stores helped JB Hi‑Fi deliver profit growth even as the broader retail sector softened.
Profit growth was restrained by lower comparable sales in New Zealand and higher costs of doing business, notably increased wages from a Fair Work Australia award rise and higher rental bills.
The market rewarded the stronger results and outlook: shares climbed more than 4% in early trade and closed up 60 cents (3.2%) at $19.12, a 27‑month high.
JB Hi‑Fi expects sales to lift by between 6% and 8% in the coming financial year, and reported July sales growth of 8% with like‑for‑like growth of 2.2%.
Deutsche Bank analyst Michael Simotas said the upbeat outlook implies better sales than the market expected but cautioned that recent stock gains may already reflect much of that improvement; he noted sales were slightly ahead due to new stores, gross margin was in line, costs were higher, and the group expanded EBIT margin by 21 basis points.
Yes — JB Hi‑Fi plans to open about a dozen new stores and convert 10 existing stores to its new Home appliances concept format.
JB Hi‑Fi declared a final dividend of 22 cents a share, fully franked, bringing total dividends for the year to 72 cents a share.
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