Even the high performing consumer electronics retailer and discounter JB HI Fi couldn’t avoid the second half slowdown in sales growth that hit retailing from March onwards.
The company yesterday revealed that sales growth had slowed towards the end of the financial year on June 30 and had been negative in July.
The shares eased 10c to $19.45 as investors assessed the report from a retailer regarded as the best performer in the sector at the moment.
The company said yesterday that full year earnings rose 26%, on a full-year rise in sales of 17%.
At the December half way mark sales were up 23% and earnings were up 29%.
The slowdown in second half sales growth can be seen from the way comparable (or like for like) sales growth halved to 4.8% in the June half from the 9.9% in the six months to December (which includes the big Christmas-New Year selling season and post Christmas sales).
Comparable store growth was 11.5% in the stimulus boosted 2009 financial year, so the slowing trend has been dramatic in the past year to 18 months.
At the December half year comparable Australian sales growth was 10.2%, but a full year figure wasn’t given in the final profit press release, as has been previously.
The company revealed that the slowdown had continued into the new financial year and hinted that it had had a tough June.
"Total sales growth for July was positive," it said in yesterday’s ASX statement.
"Whilst comparable store sales growth was slightly negative, it was a positive trend on previous month’s trading.
"We expect sales growth in the first half of FY11 to be challenging as consumer spending remains subdued," directors said yesterday.
But it has still done a lot better than rivals like the Dick Smith arm of Woolworths and Harvey Norman which encountered flat, slow growth in the six months to June in particular.
Harvey Norman saw topline and same store sales turn negative in the June quarter.
Second-half profit for JB Hi-Fi in fact was up 20% at around $42.6 million in the six months ending June 30 from $35.4 million a year earlier.
(Second-half figures are worked out by subtracting first-half earnings from the $118.7 million full-year profit the Melbourne-based company reported yesterday.)
That $118.7 million profit was up from $94.438 million in 2008-09,
to the ASX yesterday.
It was under earnings consensus in a Bloomberg poll of $121 million for the 12 months.
JB Hi-Fi declared a final dividend of 33c, fully franked, taking total dividends for the year to 66c, fully franked.
That’s up 50% from the 2009 payout.
JB Hi-Fi said it expected ‘‘FY11 to be another good year of sales and earnings growth.
"The company expects sales in FY11 to be circa $3.2 billion, a 17 per cent increase on the prior financial year.’’
"The company opened 23 new stores in FY10 which was the largest number it has opened in any one year.
"These stores, together with the maturing of the 39 stores opened over the previous two financial years will continue to drive solid revenue and earnings growth.
"The company expects to open circa 18 new stores in FY11 across Australia and New Zealand.
"New Zealand continues to show signs of improved trading from the 10 JB stores (JB store comps 13.4%) as we increase our scale, buying power and grow brand recognition.
“We expect to open a further 3 JB stores in New Zealand during FY11,” CEO Terry Smart said.
The group currently has 141 stores (Australia: 131, NZ: 10), of which 130 are JB Hi-Fi branded stores.
The company says it is targeting 210 JB Hi-Fi branded stores and plans to open at least 13 to 15 stores a year for a few more years.
"With these 80 stores yet to open, the company can look forward to at least 5 to 6 years of good sales and earnings growth," directors said in yesterday’s statement.
The company said sales growth in 2009-10 had been lifted by computers, telecommunications, accessories and audio visual goods.
"We are pleased with this solid result, especially given we were cycling against strong prior year growth driven by the government stimulus packages and low interest rates," Mr Smart said in the statement.
"While our strong retail model remained very resilient throughout this tough economic period, it’s a testament to the strength of our team in not only maintaining, but improving the company’s best in class performance metrics."
Mr Smart replaced long time CEO Richard Uechtritz earlier this year. That is one reason why analysts will be cautious in their reaction to the report and will look closely to see if there are any worrying signs for the new CEO to come to grips with.
