JB Hi-Fi (JBH) re-established itself as a market darling yesterday with a slightly better than expected result (and a small buyback), plus a higher dividend.
As a result the shares jumped 68 cents or well over 10% to $21.69, close to the 12 monthly high of $21.85 reached in late May.
Final dividend was lifted 2 cents to 31 cents a share, fully franked, taking the full year payout to a fat 90 cents a share vs 84 cents in 2012-14.
The company said net profit rose 6.3% in the year to June to $136.5 million thanks to solid sales of small kitchen appliances and mobile phones offset weakness in software.
Sales for the 12 months ended June 30 were up 4.8% to $3.65 billion, again beating market expectations.
CEO Richard Murray added to the upbeat feeling about the company by forecasting a stronger sales effort in the current financial year.
He says he expects sales to grow 5.4% to $3.85 billion in 2015-16 as the company opens six new stores and converts 16 existing stores to the JB Hi-Fi HOME format, which includes large and small home appliances. (In other words its taking Harvey Norman head on.)
On top of this, Mr Murray said the company will introduce small appliances into JB Hi-Fi’s existing stores to try and gain a larger share of the $4.6 billion home appliances market.
(That should please Sunbeam owner GUD, plus Breville and its biggest shareholder, Premier Investments, controlled by Solomon Lew.)
JBH 1Y – JB Hi-Fi increases leverage to housing sector
This move from JB Hi-Fi came a week after smaller rival Dick Smith unveiled plans to introduce small appliances into 100 Dick Smith stores over the next five months under a sub-brand, ConnectedHome.
Mr Murray said small appliances had been installed in four JB Hi-Fi stores to date, with pleasing results, and another 14 stores would range small appliances by November 2015.
“The rollout of small appliances to our existing store network is a natural progression of our proven home appliances strategy," Mr Murray said yesterday.
"The home appliances market in Australia is circa $4.6 billion, larger than many of the other categories JB HI-FI operates in, and presents a significant opportunity for the company as it leverages the strength and trust in the JB HI-FI brand.
"By leveraging our strong heritage in innovation and technology, we see our continued expansion into home appliances and ultimately the connected home as a significant opportunity for JB in the future," he said.
JB Hi-Fi’s net profit result beat market forecasts of about $131 million and topped the company’s $127 million-to-$131 million guidance.
Same-store sales growth surged a solid 7.4% in the second half after a weaker first half, taking annual same-store sales growth to a more sedate 2.9%.
JB Hi-Fi also opened five new stores, taking its network to 187 stores. It expects to open six stores in 2016 and maintained its stated target for 214 stores over time.
The company also announced it would again buy back $15.2 million of its shares to offset the dilutionary impact of shares issued as part of the employee share options scheme. That is a regular occurrence.
