JB Hi-Fi's NZ sales nudge higher as turnaround continues

Monday 12th August 2019

JB Hi-Fi's New Zealand sales nudged higher as the Australian discount consumer electronics retailer continued its turnaround plan for an underperforming Kiwi business.

The retailer's New Zealand sales increased 2 percent to $236.2 million in the year ended June 30, in line with the $240 million guidance it offered in February when it raised its forecast by $20 million. The Australian parent retained a conservative forecast for the coming year, predicting flat sales.

JB H-Fi closed an unprofitable New Zealand store in the period, leaving it with 14 outlets as at June 30. On a same-store basis, sales were up 8.2 percent. Online sales jumped 38 percent to $13.3 million, and now account for 5.6 percent of revenue, up from 4.1 percent a year earlier.

The retailer said sales growth was supported by communications, fitness and audio equipment and small appliances.

The latest government data show the value of New Zealand retail sales of electrical and electronic goods increased 3.2 percent to $2.73 billion in the nine months ended March 31 from the same period a year earlier, even as the volume of sales were up 12 percent.

Warehouse Group-owned rival, Noel Leeming, which operates 77 stores, reported year-to-date third-quarter sales of $704.3 million, up 5.7 percent from a year earlier, or 3.9 percent on a same-store basis. Another competitor, Harvey Norman's first-half New Zealand sales were up 1.6 percent at $513.2 million on both an aggregate and same-store basis. It operates 39 stores in New Zealand.

Margins on consumer electronics have been increasingly squeezed by vigorous competition and cheap imports, contributing to the demise of the debt-laden Dick Smith Electronics in 2016.

JB Hi-Fi started repositioning the Kiwi business in 2016, pulling out of whiteware retailing, which wasn't making money.

Today, it said it's still pursuing that strategy of improving performance, after reporting a loss of $1.9 million on an earnings before interest and tax basis compared to an ebit-loss of $2.9 million a year earlier.

Gross margin shrank 37 basis points to 17.3 percent due to the mix of sales. However, the retailer trimmed 57 basis points from its cost of doing business to a ratio of 16.7 percent of sales.

JB Hi-Fi's group sales increased 3.5 percent to A$7.1 billion and net profit was up 6.4 percent at A$372.8 million. The board declared a final dividend of 51 Australian cents, taking the annual return to A$1.42. The ASX-listed shares jumped 7.8 percent to A$30.14 in early trading.

(BusinessDesk)

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