JB Hi-Fi New Zealand's first-half earnings slump on margin squeeze

JB Hi-Fi chief executive Richard Murray

ASX-listed discount electronics good retailer JB Hi-Fi's management is keeping an eye on the New Zealand business after first-half earnings halved on this side of the Tasman as rising costs eroded the firm's margins.

New Zealand earnings before interest and tax fell to $1 million in the six months ended December 31 from $2 million a year earlier, the Melbourne-based company said in a statement. Sales slipped 1.7% to $125.1 million, although the year-earlier period was boosted by "market-wide demand for third-party prepaid content cards" in the wake of Dick Smith Electronics' liquidation.

The washing through of the impact of those cards and "underlying improvements in a number of categories" helped fatten the New Zealand arm's gross margins by 113 basis points to 19.2%. However, it was at a slower pace than the cost of doing business which increased 179 basis points to 17.11%.

"The overall performance in New Zealand is a focus for the management team," JB Hi-Fi said.

Government figures show New Zealanders spent $3.1 billion on electrical and electronic goods retailing in the 2016 March year, up from $2.81 billion a year earlier.

The New Zealand arm has 16 stores, one of which was opened in the period, making it a small player for the wider group's network of 302 stores. Net profit for the group rose 16% to $A110.4 million on a 24% increase in sales to $A2.62 billion, which included about a month's contribution from JB Hi-Fi's recently acquired The Good Guys division.

The local division's margins lagged behind the larger Australian division business with gross margins of 22.22% and a cost of doing business ratio of 13.93%.

The board declared an interim dividend of 72Ac per share, payable on March 10 with a record date of February 24. The ASX-listed shares last traded at $A28.47 and have gained 32% over the past 12 months.

JB Hi-Fi forecast annual sales of $AA4.33 billion will come from the JB division and $A1.25 billion from Good Guys, with underlying earnings of between $A200 million and $A206 million.

(BusinessDesk)


Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7018 0.0029 0.41%
AUD 0.9151 0.0034 0.37%
EUR 0.5960 0.0025 0.42%
GBP 0.5222 0.0019 0.37%
HKD 5.4853 0.0273 0.50%
JPY 78.8340 0.2830 0.36%

Commods

Commodity Price Change Time
Gold Index 1257.1 -3.460 2017-12-14T00:
Oil Brent 62.7 0.860 2017-12-14T00:
Oil Nymex 57.1 0.410 2017-12-14T00:
Silver Index 15.9 0.065 2017-12-14T00:

Indices

Symbol Open High Last %
NASDAQ 6887.4 6901.1 6875.8 -0.28%
DJI 24631.0 24672.5 24585.4 -0.31%