In contrast to Myer, JB Hi-Fi’s interim performance was solid, a record for sales and profits, even if it was down on what the company was telling us was happening at the time of the annual meeting in October.
Despite a halving of sales growth from the August forecast of 17% or so, the company still boosted earnings by around 15% and hopes to get a similar boost in the second half to push profit for the year to and says it expects to achieve full-year net profit to between $134-139 million.
Shareholders have been rewarded with a near 50% increase in interim dividend to 48c a share from 33c in the first half of the 2010 financial year.
The company said the higher payout was "in line with dividend policy of a payout ratio of 60%".
There was no mention of any capital management measures which were alluded to at the AGM last October. Perhaps the sharp jump in fully franked dividends is a start.
Whatever, the market liked the result and progressively pushed the shares higher during trading yesterday. They started out around 15 to 17c higher and ended up 47c or 2.5% at $19.55.
JB Hi-Fi said that half-year net profit was $87.9 million, up 15.6% on the first-half of 2009-10.
Total sales rose 8.3% for the six months to December 31, to $1.68 billion, while the cost of doing business remained steady at 13.2%.
The growth in sales is sharply lower than what was said at the AGM in October.
"The Company has continued to see a steady improvement in store sales since June 2010 and as a result we now have positive comparable growth year to date for FY11.
"Total Company sales for the first quarter FY11 are up 12.2% on the same period last year however behind budget by approximately 5%.
"The Company expects to make up part of this shortfall in the second half, which is cycling less challenging comparable store sales.
"The overall strength of the economy, low levels of unemployment and a strong product assortment should underpin a successful Christmas trading period."
In fact total sales growth disappeared for the second quarter and overall and the company saw comparable store sales fall, a rare occurrence for what has been the fastest growing retailer in the past seven years.
JB’s sales growth was uncharacteristically negative – down 1.5% on a like-for-like basis – but that was compared to the 9.9% surge in the December half of 2009.
As well, the performance was also hit by the weak performance of its NZ stores (blame last year’s GST increase) and its Clive Anthony stores, which are mostly in Queensland and whitegoods – oriented.
And the start to the second half of the year has been quiet.
The company said in yesterday’s statement that "sales in the first five weeks of the second half were challenging as consumer spending remained subdued.
"Consolidated sales growth remained in line with the first half, with JB Hi-Fi Australia’s comparable store growth flat.
"Our Clive Anthonys and JB New Zealand stores experienced negative comparable store sales growth.
“Sales since the start of January have remained tight as high levels of discounting and the impact of price deflation continued."
"Whilst we anticipate a volatile and competitive market in the second half, we are confident that the JB model can deliver another record year of sales and earnings” said CEO Terry Smart.
"The company expects Sales in FY11 to be circa $3.0 billion and Net Profit after Tax in the range of $134 million to $139 million, which is a 13% to 17% increase on the prior year," he said.
That means sales expectations for the full year have been pulled back from a previously guided $3.2 billion to $3 billion, but that will still be up on the $2.73 billion recorded in 2009-10.
The slowdown is not impacting the expansion plans of the company.
JB Hi-Fi said it opened 13 stores in Australia and New Zealand in the first half of 2010-11 and plans to open five more in the second-half.
"The group is targeting 210 JB Hi-Fi branded stores, up from 143 currently, with plans to open 15 stores each year.
‘‘With 67 JB Hi-Fi stores yet to open, the company can look forward to at least four to five years of good sales and earnings growth,’’ the statement said.
