Electronics retailer JB Hi-Fi has lifted full-year profit 13.3 per cent to $172.4 million.
Total sales for the 12 months to June 30 leapt 42.3 per cent to $5.63 billion following November’s acquisition of white goods retailer The Good Guys, while underlying profit rose 36.5 per cent once costs associated with the acquisition were stripped out.
JB Hi-Fi expects sales to rise to about $6.8 billion in 2018 following what it says was a strong start to the financial year.
The electronics chain reported underlying net profit after tax (NPAT) was up 36.5 per cent to $207.7 million (FY16: $152.2 million) from $5.6 billion of sales (FY16: $3.95 billion) for the full year ended 30 June 2017 (FY17). Total sales growth for FY17 was 42.3 per cent.
Group EBIT was up 38.5 per cent on the prior corresponding period to $306.3 million.
Results in New Zealand were less positive, with total sales down 0.3 per cent to NZD234.0 million, with comparable sales down 8.8 per cent.
Online sales in New Zealand for FY17 grew 5.3 per cent to NZD4.9 million or 2.1 per cent of total sales. In light of the challenging recent financial performance in New Zealand, fixed asset and goodwill impairments totalling AUD15.8 million were recorded in the statutory FY17 results.
“We are proud of the strong market position the JB brand has built in the New Zealand market over the last 10 years, having driven great value for New Zealand consumers over this time,” said Richard Murray, JB Hi-Fi group CEO.
“While we are disappointed with our recent financial performance, we have completed a review of the business and are finalising a two year strategy to improve performance. We remain committed to the NZ market and the 500 employees who strive every day to delight our customers instore and online. We have recently launched a new website [in New Zealand] and are pleased with its performance to date”.
JB will roll back its Home offering in New Zealand as part of the turnaround, after realising that it couldn’t generate the scale to make a bulky goods option viable.
Murray added that JB’s best performing stores in NZ had been stymied by the home offer and that he expects a material improvement in those locations once the offer has been consolidated.
Murray said it had been a particularly strong 18 months for the business in Australia.
JB HI-FI Australia total sales grew by 10.9 per cent to $4.15 billion, with comparable sales up 8.6 per cent.
In FY17 online sales grew 38.4 per cent to $158.9 million or 3.8 per cent of total sales,
The electronics chain said its low CODB “remains a competitive advantage and is maintained through continued focus on productivity and minimising unnecessary expenditure.”
JB Hi-Fi acquired whitegoods retailer, The Good Guys, in November last year. For the period under its new ownership, total sales were up 0.2 per cent to $1.26 billion with comparable sales down 1.3 per cent.
Online sales were $64.4 million or 5.1 per cent of total sales. Earnings for the period under JB Hi-Fi ownership were $46.4 million.
Looking ahead, JB Hi-Fi expects to open five JB Hi-Fi stores and for total group sales to be circa $6.8 billion (JB Hi-Fi $4.65 billion and The Good Guys $2.15 billion).
“The July sales results in both the JB Hi-Fi and The Goods Guys businesses are pleasing, especially in light of the strong sales growth in the prior year. We are clear on our objectives for 2018 and feel we have good momentum heading into the important Christmas trading period,” said Murray.
Hianyang Chan, senior research analyst at Euromonitor International, said JB Hi-Fi continued to strengthen its position in the electronics and appliances market by increasing its range across both of its store formats and growing its network of JB Hi-Fi HOME stores.
“The company has traditionally been quick to adapt to new technologies and the quick-evolving consumer demands and it was no different over this financial year,” he said.
Chan said the upcoming entry of Amazon into the Australian retail landscape is expected to squeeze retailer margins by offering lower prices for a wide range of products and better delivery experiences, which will prompt more consumers to shop online through digital stores.
“This will have a material impact across many major retailers in Australia, especially within the electronics and appliances retail market and the JB Hi-Fi group will be no exception. It is expected that the JB Hi-Fi group will seek to be even more dynamic in their inventory range and prices to meet consumer demands, increasing investment to strengthen their digital presence and further improvement in customer experiences and efficiencies within their supply chain to better position themselves to compete with the upcoming Amazon onslaught.”
Pointing to subdued ABS retail figures for electrical and electronic goods over the last six months, Chan said the outlook does not appear too positive in the near terms. “As cost of home ownership continue to crimp household spending and wages growth experiencing some of the lowest growth in recent times, the retail sector, including the electrical and electronic goods sector, may struggle in the short term and an uncertain longer term outlook.”
