JB Hi-Fi post record profits as Kiwi market stabilises

Electronics retailer JB Hi-Fi is seeing improving sales activity in the New Zealand market and plans to open more stores after posting a bumper first half profit, it was announced today.

The Australian company reported record half year profits for the six months ending December 31 of $A76 million up 29% on the previous year’s results of $A59 million.

Sales were up 23% from $A1.26 billion to $1.5 billion. JB Hi-Fi chief executive Richard Uechtritz said sales in December were solid across “almost all categories”.

Mr Uechtritz said the New Zealand side of the business was beginning to show signs of improving from its nine stores. In January, the company closed three of the remaining four Hill and Stewart stores due to expired leases.

The company opened 15 new stores during the six months to December 31 and plans to open another seven stores in the second half of the financial year. 

Mr Uechtritz said this would allow the company to focus on growing the JB Hi-Fi brand here in New Zealand. “We expect to open at least three to four stores in New Zealand this calendar year.”

Despite the good half year result the company's shares were down 4.8% today (at 3pm NZ time) to $A19.13.

But Mr Uechtritz said; “we are once again extremely pleased with this strong result, particularly the comparable store sales of 6.5% in December, when compared to the prior corresponding period, which was impacted by the government’s stimulus package.

“JB has proven to be very resilient throughout the economic downturn which led to low consumer confidence and spend. This performance is testament to our strong retail model and depth and strength of our management team,” Mr Uechtritz said.

Comparable store sales growth for the period was up 9.9%, up 10.2% in Australia and up 5.8% in New Zealand. Gross margins remained relatively stable, down 26 basis points (19 basis points for Australia and 196 basis points for New Zealand) despite competitor discounting and the strong performance of low margin categories.

Mr Uechtritz said the company would continue to grow its market share as its newly opened stores matured. He said the company would open more stores, expand its offering and reduce prices on the back of increased economies of scale and a continued focus on costs.

Sales in January have met internal expectations with comparable store sales at 7.1%. Mr Uechtritz said while the retail outlook continued to be uncertain, the company is cautiously optimistic that it will have another strong year.

JB Hi-Fi confirmed its previous guidance that sales would be about $A2.8 billion or a 20% increase on the prior financial year, net profits after tax are expected to be in the range of $A117 million to $A120 million or a 24% to 27% increase on the prior year.

The company currently has 134 stores, 124 in Australia and 10 in New Zealand, one is a Hill and Stewart store (a non-branded JB Hi-Fi retailer).