JB Hi-Fi profit rises as store network expands

Company reports net profit after tax of $82.1 million.

Electronics and entertainment retailer JB Hi-Fi (ASX:JBH) has reported a net profit after tax (NPAT) of $82.1 million for the six months ended 31 December 2012, up 3 per cent from the previous period.

Sales growth for its branded stores in Australia and New Zealand was 3.1 per cent while total sales for the retailer grew 2.3 per cent. Comparable store sales were -3.5 per cent.

Its gross margin was 21.5 per cent, resulting in earnings before interest and tax (EBIT) of $123.7 million compared to a half year EBIT of $120.7 million.

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While JB Hi-Fi CEO Terry Smart said he was pleased with the overall result, he conceded that the visual TV category had impacted comparative store growth.

“The [retail] industry has seen TV sales decline over the past few years as the category moves towards a more typical replacement drive sales market,” he said in a statement to the ASX. “However, the JB brand continued to attract customers with market share growing solidly.”

JB Hi-Fi opened 11 new stores in the half-year (HY) 2013 in Australia and merged four existing co-located JB Hi-Fi and Clive Anthonys stores under its new Home brand. According to ASX results, the company expects to open a total of 15 new JB Hi-fi stores in full year (FY) 2013.

As of 31 December 2012, JB Hi-Fi owns a total of 176 stores with 163 located in Australia and 13 in New Zealand. However, Smart said the company has a target of 214 stores in A/NZ which should lead to "solid growth" in the future.

“Our new store rollout continues to generate a solid return on capital with most of these stores located in shopping districts where JB Hi-fi does not currently have a presence and thus has minimal impact on our existing store network,” he said.

“Our trial of JB Hi-Fi Home, whilst at an early stage, has exceeded internal expectations and is seeing positive customer engagement with good growth in appliances and no adverse effect on the traditional product categories.”

Online sales

Turning to e-commerce, the retailer reported that its online sales were up 40.3 per cent in HY13 and represented 2 per cent of total sales.

According to JB Hi-Fi, the popularity of its websites continued to grow with unique visitors increasing 30.9 per cent over the previous year to an average of 1 million visitors per week.

The retailer was also looking to expand its JB Hi-Fi Now music platform in order to capture new digital market opportunities during 2013.

FY13 forecast

JB Hi-Fi has forecast sales in FY13 to be approximately $3.25 billion and NPAT within the range of $108 million to $112 million. Smart said this was due to consolidated comparable store sales in FY13 of negative 3 per cent.

“In the second half of FY12, we saw aggressive discounting across the market, which, while driving sales, did impact gross margin,” he said.

However, Smart said the retailer had a positive start to 2013 with total sales growth in January of 11.7 per cent and comparative store sales growth of 4.2 per cent.

“The January [2013] gross margin has improved on last year as we cycle the significant market-wide promotional period from last year. We owe a great deal of our success to the passionate and knowledgeable staff across both our stores and support office,” he said.

Follow Hamish Barwick on Twitter: @HamishBarwick

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