JB HI-FI’s Preliminary Half Year After Tax Profit Down 9.4 Percent

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JB HI-FI’s Preliminary Half Year After Tax Profit Down 9.4 Percent

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  • Sales decline of 1.6 percent to $4.86 billion
  • Impressive result given 55 percent of stores affected by July to October lockdown
  • On-line sales $1.1 billion, representing 23 percent of total sales
  • Computer and home office equipment sales boosted by ‘work-from-home’ trend

JB Hi-Fi Limited (‘JB Hi-Fi’ or the ‘Group‘) is Australia’s largest home entertainment retailer. It employs 13,000 people and operates 302 stores, under the JB Hi-Fi and The Good Guys brands.

Established in 1974, JB Hi-Fi was floated on the Australian Stock Exchange in 2003. Its consumer product categories include computers, tablets, TVs, cameras, Hi-Fi and Home Theatre. The Group has developed a multichannel sales capability, that provides an integrated in-store, online and phone sales service. This business model enables customers to choose between online fulfilment, using click and collect or direct delivery from store. The model also supports corporate, government and education customers. The Group’s scale benefits, premium store locations and strong supplier relationships, reinforce the Group’s dominant market positioning across Australia and New Zealand.

Sales update and preliminary HY22 results

Preliminary unaudited HY22 financial results suggest that the retailer has weathered the COVID pandemic well. This is despite extended lockdowns that closed 55 percent of its stores from July to October.

Sales for the 6 months to 31 December 2021 were $4.86 billion, down from $4.94 billion in the previous corresponding period, representing a decline of just 1.6 percent. Net profit after tax for the same period was $288 million, down 9.4 percent on the same period last year, but up an impressive 68.8 percent over a two-year period. Sales were up 21.7 percent over the same comparable two-year, pre-Covid period. Online sales accounted for $1.1 billion or 22.7 percent of total sales for the half-year to December 2021. This is an increase of 62 percent on the previous corresponding period.

The resilient sales outcome reflects heightened customer demand for consumer electronics and home appliance products. Demand for computers and home office equipment has been boosted by the trend to ‘work-from-home‘, which is now company policy for a growing number of businesses. The home renovation boom has also boosted demand for televisions and Hi-Fi equipment.

The Productivity Commission released a research paper in September 2021 which revealed that up to 40 percent of workers have worked from home since the onset of the pandemic. The Commission pointed out that working from home is particularly well suited to office-based workers. The Commission noted that this is especially the case where workers use computers and do not perform physical, outside activity.  Census data from 2016 showed that 35 percent of workers had jobs that were amenable to working from home. This is positive news for JB Hi-Fi.

Looking Ahead

Audited half-year statutory results will be released on 14 February 2022.

The result should confirm JB Hi-Fi’s home office equipment and home entertainment category leadership position as the ‘work-from-home’ trend and home renovation boom continue.

The Group’s already dominant retail network is a limiting factor in terms of existing product market expansion. On the other hand, its buying power, operating scale and brand leadership in selective categories, provides for strong sales margins and cash flow, well into the future.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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