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JB Hi-Fi first-half NZ sales fall 6% from RWC boom but profit up

Australian discount consumer electronics chain JB Hi-Fi's New Zealand sales fell 6 percent in the first half from a year-earlier result boosted by the 2011 Rugby World Cup, though it still managed to lift profit.

Sales fell to $117.5 million in the six months ended December 31 from $124.9 million a year earlier, the ASX-listed company says in a statement.

The fall in sales came from a boost in revenue in 2011 when New Zealand hosted the Rugby World Cup and reaped the benefits from an influx of tourists and keen sports supporters looking for gadgets to watch the game.

Even with the fall in sales, the New Zealand unit lifted pre-tax earnings 17 percent to $2.6 million, squeezing more from its customers as improved productivity helped reduce the retailer's costs of production.

JB Hi-Fi's New Zealand stores reported their maiden operating profit last year, lifting sales 18 percent in the stand-out performance for the Victorian-based company.

The group reported a 3 percent increase in first-half profit to $A82.1 million, or 83 Australian cents per share, on a 2.3 percent rise in sales to $A1.82 billion. It expects annual sales of $A3.25 billion and profit between $A108 million and $A112 million.

"In the second half of FY12 we saw aggressive discounting across the market, which while driving sales, did impact gross margin," chief executive Terry Smart says in a statement. "As we cycle this period we anticipate sales growth may be more challenging, but this should be offset by a relatively stable gross margin environment."

The retailer has seen a strong start to the year, with total sales growth of 12 percent in January, and an improved gross margin from a year earlier, he says.

The board declared an interim dividend of 50 Australian cents per share with a February 21 record date and payable on March 8.

The shares jumped 13 percent to $A12.49, and the stock is rated an average hold, based on 15 analyst recommendations compiled by Reuters with a median target price of $A10.50.

(BusinessDesk)