JB Hi-Fi again confirmed yesterday that outside Woolworths, it is the best performing retailer in the country after upgrading profit for the year to the end of this month.
The company said it now expects its full year net profit in fiscal 2009 to be around $92 million, a 41% increase on the previous year.
The company had previously said it was “comfortable” with analyst estimates for earnings of A$87.1 million, so the upgrade is around $5 million, not much, but in the past year of mixed retailing conditions and a slowing economy, it’s not bad going.
Shares in JB Hi-Fi jumped more than 5% to trade up 69c at $14.17.
They hit a 52 week high of $14.35 during trading yesterday.
The government stimulus packages have obviously helped (as they helped car sales last week with the tax breaks for small and medium businesses).
And the chain is doing better than its bigger rivals, Harvey Norman and the Dick Smith division of Woolworths.
JB HI-Fi says it expects sales for the year will increase by 26% from 2008 to about $2.3 billion, with comparable store sales growth for the 11 months ended 30 May rising a solid 10.6%.
The company said in a statement to the ASX that full year 2009 gross margin for Australia would be "similar" to last year, despite a rapid growth in new lower margin categories such as games and a very competitive market.
And the company’s cost of business continues to decline, which will boost its earnings before interest and tax margin increase over the previous financial year.
Chief executive Richard Uechtritz said the company’s market share continued to expand and it had been able to reduce its prices from cost cutting and increased economies of scale.
"Compared to a general softness in the more traditional categories of discretionary retail spending in the economy over the past year, our experience particularly in the field of home entertainment has been very positive, as reflected in the results," he said in the statement to the ASX.
JB Hi Fi expects to open 160 new company-branded stores that are of a similar size, sales and earnings power to the current average store.
As well, it will open another 50 stores in smaller catchment areas, mainly in smaller mall and strip metropolitan shopping centres and country towns across Australia and New Zealand.
The company said this compared with 170 Harvey Norman-branded stores owned by its competitor across Australasia, as well as Woolworths’ 363 Dick Smith-branded stores also located across Australasia.
JB Hi Fi had opened 15 new stores per year on average, and had a total store target number of 210 stores from the 105 stores currently in operation, Mr Uechtritz said.
“While the current overall retail climate is poor, this excellent result shows that we have many positives working in our favor,” Mr Uechtritz said in the statement. “That should continue to more than offset the effects of the weaker economy.
“Based on our experience of opening about 15 new stores per year, our target of 210 stores from the 105 stores we have now means the company has many years of good sales and earnings growth to look forward to,” Mr Uechtritz said.
