JB Hi-Fi expects its full-year net profit to soar by nearly 70%, citing strong sales and bigger margins

(SMH, Justin McManus)
  • JB Hi-Fi expects full-year net profit to soar more than 60% and sales to rise more than 12% despite a weaker June quarter.
  • JB Hi-Fi and its appliances business, The Good Guys, have been big beneficiaries of redirection of consumer spending through the pandemic.
  • The record result was underpinned by strong sales and fatter gross margins as JB Hi-Fi sold more high-margin appliances and discounted less.
  • Visit Business Insider Australia’s homepage for more stories.

JB Hi-Fi expects full-year net profit to soar more than 60 per cent and sales to rise more than 12 per cent despite a weaker June quarter, when the retailer struggled to match the 30-per cent plus sales growth from its core businesses in the same period last year.

Releasing unaudited results for the 12 months ended June 30, JB Hi-Fi said it expected net profit to rise 67.4 per cent to $506.1 million – about 7 per cent to 8 per cent higher than consensus forecasts – and earnings before interest and tax to climb 53.8 per cent to $743.2 million.

The record result was underpinned by strong sales and fatter gross margins as JB Hi-Fi sold more high-margin appliances and discounted less.

Group sales rose 12.6 per cent to $8.9 billion, with online sales up 78.1 per cent to $1.1 billion, reaching 11.9 per cent of total sales.

JB Hi-Fi and its appliances business, The Good Guys, have been big beneficiaries of a redirection in consumer spending from international and domestic travel, the shift to working from home, and strong retail spending propped up by wage subsidies and record low interest rates.

“We are pleased to report record sales and earnings for 2021,” said group chief executive Richard Murray.
“Our continued focus on the customer, and investments in our online business and our supply chain, have enabled us to seamlessly meet our customers’ increased demand both in-store and online.”

The results – Mr Murray’s last before he takes the helm of Premier Investments in October – showed momentum had slowed since the December half.

Group sales in the six months ending December rose 23.7 per cent to $4.94 billion, net profit jumped 86.2 per cent to $371.7 million and earnings before interest and tax soared 76 per cent to $462.7 million.
Customer demand remained strong in the June quarter but the group struggled to beat the 30 per cent-plus growth in the June quarter last year.

Same-store sales at JB Hi-Fi stores in Australia in the June quarter were 7.8 per cent lower than those in the same period in 2020, when same-store sales soared 31.4 per cent, but were 21.2 per cent higher on those in the June quarter of 2019.

At The Good Guys, same-store sales fell 1.5 per cent in the June quarter, after jumping 30.2 per cent in the year-ago period, but were 28.3 per cent higher than those in 2019.

Same-store sales at JB Hi-Fi’s New Zealand stores rose 46.9 per cent in the June quarter, after falling 24.1 per cent in the June quarter last year, and were 11.5 per cent higher than those in the June quarter of 2019.
Mr Murray said the group expected some disruption to sales as a result of hard lockdowns in NSW, Victoria and South Australia and would provide a July sales update with the full year audited results on August 16.

JB Hi-Fi kept its Greater Sydney stores open during the first three weeks of the Sydney lockdown but closed to customers (except for click and collect and online) on Sunday when the NSW Government ordered non-essential retailers to close.

In Greater Sydney, only stores that sell groceries, liquor, petrol, hardware, landscaping supplies, pet care products or office supplies are permitted to open.

While Harvey Norman has kept parts of its Sydney stores open to enable customers to buy home office technology, JB Hi-Fi has opted to close and switch to online only and click and collect.

JB Hi-Fi’s stores are closed in Melbourne but are open in South Australia after the government clarified trading rules overnight.

This story originally appeared in the Australian Financial Review. Read the original story here.