Shares in JB Hi-Fi nearly reached its all time high yesterday after it reported a better than expected 45% jump in net earnings and a sharply higher dividend.
The shares jumped more than 8% to $17.30, just short of the high of $17.56 in afternoon trading.
That was after a surprise upgrade in earnings that was bettered yesterday by the stronger trading conditions in the month of June.
JBH said net profit hit a record $94.4 million (2008: $65.1 million) in the year to June 30 after sales rose 27% to $2.327 billion from 2008’s $1.829 billion.
"The result exceeded the company’s recent profit guidance in June of circa $92 million due to stronger than expected June trading," the company said in a statement to the ASX yesterday.
Dividend was upped to a fully franked 29 cents a share (final 2008 16 cents) an increase of 13 cents or 81%.
That boosted the full year payout 69% to 44 cents.
The earnings surge, boost to dividend and the sharp rise in the share price in the past four months will make JBH one of the stars of the 2009 reporting period.
And directors have forecast another 20% rise in sales in the 2010 financial year, which would put them around $2.8 billion.
"Sales for July and August FY10 YTD have met internal expectations.
"Comparable store sales of 3.8% have been affected by very strong visual sales this time last year leading into the Beijing Olympics.
"Excluding the visual category, comparable store sales YTD are 8.6%. The company expects sales in FY10 to be circa $2.8 billion, a 20% increase on the prior financial year," directors said in yesterday’s statement.
In the 2009 year directors said that consolidated comparable store growth was 11.5%.
"Sales growth was solid in all product categories. The strong comparable store sales growth was driven by games, computers, DVD, telecommunications and visual, combined with the maturing of recently opened stores.
"Investments of $44,444,000 were made during the financial year in capital expenditure projects.
"The majority of this capital expenditure related to the 19 new stores opened during the period. These stores are anticipated to contribute towards solid earnings growth in the 2010 financial year.
"Gross margin was 21.6% (2008: 21.9%), a good result considering the very competitive environment and strong growth in the lower margin categories of games and computers. Cost of doing business was down at 14.5% (2008: 15.3%) contributing to an increase in EBIT margin to 6.1% (2008: 5.6%).
"Cash flow from operations increased substantially to $145.6 million for the full year."
CEO Richard Uechtritz said the result again "highlights the strength and resilience of the JB retail model during an uncertain retail environment. Home entertainment continues to become more of a staple category as consumers embrace technology.
"JB continues to focus on keeping costs down and reducing prices to our customers.
“Our continued store rollout and the maturing of recently opened stores enables us to expand our offering, take advantage of increased economies of scale and improve our market share.
“We are currently expecting therefore to have continued good sales and earning growth in the coming year."
The company said it had 123 stores (109 Australia, 14 NZ) at year end, of which 106 are JB Hi-Fi branded stores.
"With a target of 210 JB Hi-Fi branded stores (160 full stores and 50 smaller format stores) the company can look forward to many years of good sales and earnings growth. The company expects to open circa 18 new stores in FY10."
The Group had total interest bearing liabilities of $90 million at the end of the period.
The Group has total debt facilities of $208 million, split between a senior debt facility of $145 million, expiring in December 2011, and an overdraft facility of $63.million.
The overdraft facility is renewable annually and has an additional seasonal bank overdraft facility of $25 million in February to April.
