Consumer electronics and whitegoods retailer JB HiFi has lifted dividend by more than 20% for the December half year after confirming solid unaudited sales and earnings estimates issued earlier this month.
The interim was lifted to $1.97 per share from $1.63 a year ago but judging by the sharpness of the slowdown in sales growth in January, the company faces a battle to generate enough sales and earnings growth to match last year’s final.
Certainly a final equal to last financial year’s $1.53 per share is still in sight, but if the slowdown extends into the June quarter, the management will come under growing pressure to take a more conservative stance.
But the higher interim dividend was about all the good news in the company’s interim report on Monday after it revealed that sales growth in Australia had slowed dramatically in the early weeks of 2023, especially for its Good Guys whitegoods business.
While sales grew quickly in New Zealand (because the corresponding period saw lockdowns in parts of the country, especially in the huge Auckland market), the situation in Australia wasn’t pretty and will help the Reserve Bank as it searches for evidence of a slowdown in consumer spending.
JB Hi Fi said total sales growth for JB HI-FI Australia was 2.5% in January (January 2022: 4.3%) with comparable sales growth of 1.5% (January 2022: 3.6%); Total sales growth for JB HI-FI New Zealand was 20.0% (January 2022: -1.8%) with comparable sales growth of 20.0% (January 2022: -1.8%).
And total sales growth for The Good Guys was 0.0% (January 2022: 2.5%) with comparable sales growth of 0.0% (January 2022: 1.9%).
Considering total sales grew 8.6% in the December half year, 9.1% in Australia, 16.1% in NZ and 7.3% for The Good Guys, the performance in January of this year is a big, big warning to the rest of the retailing sector and investors that the rest of 2023 looks like being a hard slog, and there will be some intense price cutting and discounts in coming months.
JB HiFi flagged the looming possibility of a discount war to try and hold on to consumer business.
CEO Terry Smart had a mixed measure for investors on the January figures, saying “While we are pleased with the January trading result, with sales continuing to be well above pre Covid January 2020, we have seen sales growth start to moderate from the elevated levels seen in the first half of FY23.”
“As we enter an uncertain period, our business is well placed with a proven ability to adapt to any changes in the retail environment and trusted value-based offerings that will continue to resonate with our customers and grow our market share.”
Investors noted the nature of the message and the January slowdown and dropped the shares 5% to $44.25.
