JB Hi-Fi has reported a record half-year net profit of $76 million from $1.55 billion in sales. This is significantly higher than both Harvey Norman and the Woolworths-owned Dick Smith stores.
Dividends have been increased by 120 per cent.
Comparable store sales growth for the period was 10.2 per cent in Australia.
The company said that there had been a strong result from low-margin categories, including content and accessories for notebooks and PCs.
The company’s cost of doing business was down 13.2 per cent. Cash flow from operations was strong at $168.4 million for the half year.
The company has raised its dividend declaring a fully franked dividend of 33 cents per share, an increase of 120 per cent. The dividend will be paid on 5 March 2010. The record date for determining the entitlement is 17 February 2010. This dividend is based on a full year payout ratio of 60 per cent, up from the company’s previous target of 50 per cent.
Sales in December were solid across almost all categories, with comparable store sales a solid 6.5 per cent.
“We are once again extremely pleased with this strong result, particularly the comparable store sales growth of 6.5 per cent in December, when compared to the prior corresponding period, which was impacted by the government’s stimulus package,” said CEO Richard Uechtritz. “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 the depth and strength of our management team.
“We continue to grow our market share as recently opened stores mature, we open new stores, expand our offering and reduce our prices on the back of increased economies of scale and a continued focus on costs,” he said.
The company opened 15 new stores in the half and should open seven new stores in the second half of FY10, bringing the total new stores for the year to 22, which will be the largest number it has opened in any year since formation.
The maturing of the 39 stores opened in the last two financial years and the 22 new stores in 2010 will continue to drive solid top and bottom line revenue and earnings growth.
New Zealand is starting to show signs of improved trading from the nine JB Hi-Fi stores (JB Hi-Fi store comps 12.1 per cent) as the company increases its scale, buying power and grow brand recognition. In January, the company closed three of the remaining four Hill and Stewart stores, whose leases had expired. “This will allow us to concentrate on what we do best, grow the strong JB Hi-Fi model,” said CEO Richard Uechtritz. “We expect to open at least a further three to four JB stores in New Zealand calendar year 2010.”
The group currently has 134 stores (124 Australia, 10 NZ), of which 122 are JB Hi-Fi-branded stores. The company is targeting 210 JB Hi-Fi-branded stores and plans to open 13 to 15 stores per annum. With this rollout, the company can look forward to at least five to six years of good sales and earnings growth.
Sales in January have met internal expectations, with comparable store sales at 7.2 per cent. Whilst the retail outlook continues to be uncertain, the company is cautiously optimistic that it will have another strong year. JB Hi-Fi confirms its previous guidance that sales will be circa $2.8 billion, or a 20 per cent increase on the prior financial year, and expects Net Profit after Tax to be in the range of $117 million to $120 million, or a 24 to 27 per cent increase on the prior year.
