JB Hi-Fi (JBH) benefited from the collapse of rival Dick Smith a year ago and the early impact of the Good Guys buy to post a record 23.6% jump in half year sales to $2.6 billion in the six months to the end of December.
Shareholders will benefit from a 14.3% boost to the interim dividend to a record 72 cents a share.
Underlying earnings before interest and tax jumped 31% to $180.8 million and its net profit for the half grew by 31.7% to $125.4 million or $110.4 million on a statutory basis (after a small group of one off costs).
Same store sales in Australia increased by 8.7% in the half, driven by sales of communication products, audio, cameras, computers and home appliances while the topline figure of $2.6 billion was well ahead of most market estimates.
Gross profit for the half rose 13.2% to $496.5 million and the group’s gross margin, a key measure of profitability jumped 30 basis points to 22.2%.
JBH shares jumped 6% at one stage yesterday, but eased to end the day up 3.2% at $29.30 after touching a day’s high of $30.78.
The result includes the first contribution of The Good Guys business after JB Hi Fi completed its $870 million purchase of the chain in November.
But there was a downside and one the market focused on. December was not a stellar month, despite it supposedly being the biggest of the year for retailers with Christmas.
JB revealed that its December sales were up by just 0.7% on the previous corresponding period to $236.1 million, while the key like for like sales eased 0.7%, which is not a good sign.
JB Hi Fi said December earnings fo $14.3 million were "pleasing" and it claimed the trading for the group was impacted by the transition from a joint venture structure to a wholly-corporate model, a change that was undertaken by previous owners the Muir family ahead of the deal along with "overall market declines."
CEO, Richard Murray said trading from December had continued to improve and he said this was expected to continue into the second half.
He said that sales and earnings from the date of completion of The Good Guys acquisition in November to June 30 are expected to be in line with the previous corresponding period.
"As indicated at the time of the acquisition was announced, given the proximity to the critical Christmas trading period for both JB Hi-Fi and The Good Guys there would be limited integration in 2016," Mr Murray said.
"As we move into 2017 we are taking a deliberate and considered approach to how we integrate and leverage the scale of the group.
"Our work to date has validated the rationale regarding the power of the combination and the strategic merits of the acquisition."
JB Hi-Fi still expects synergy benefits of between $15 to $20 million a year, following a three year integration period.”We remain highly confident in our ability to realise these benefits,” Mr Murray said in yesterday’s announcement.
JB Hi-Fi said the interim result was pleasing given the strength of the previous corresponding period but it acknowledged the result also owed something to the collapse and shut down of rival Dick Smith in the second half of 2016.
Mr Murray warned this benefit was likely to wane in the coming months as the business cycles through the decline of Dick Smith and its eventual shut down.
JB Hi-Fi expects to achieve total sales of $5.58 billion, including a $1.25 billion contribution from The Good Guys and group underlying net profit after tax of between $200 million and $206 million, up as much as 35.4% on the previous corresponding period.
