Discount electronics retailer JB Hi-Fi beat its 2006 full year earnings in half the time this year.
The chain yesterday revealed a 39 per cent increase in first half net profit to $26.2 million, compared to $18.8 million in the previous corresponding period of 2006 and $25.8 million for all of that financial year.
It’s no wonder the shares leapt to a new all time high of $7.13 (hitting an intraday high of $7.22), compared to the high of $7 a share reached during speculation about private equity approaches a month ago.
JB Hi-Fi said sales on a headline basis rose strongly in the half year, up 29 per cent to $659 million from $510 million in the previous corresponding six month period.
But on a comparable store basis they were up 5.8 per cent across all stores and up 7.7 per cent in JB Hi-Fi (and down 7.8% in Clive Anthony which becomes 100 per cent controlled in the middle of the year).
Interim dividend has been lifted 39 per cent to 5c a share but that seems a bit mean given that the company had earnings per share of 25.3c (18.3c)
And the company says it’s comfortable with analysts forecasts for the year of a net profit of around $32.7 million compared to that $25.8 million profit in the year to June 2006.
That’s despite ‘soft sales’ in January which the company says have lifted so far this month.
(As an aside thefirst half profit and estimate for the year shows just how less profitable the second half is for most retailers. JB Hi-Fi is looking to earn just $5.7 million in the second half (it will probably do better than that because it seems to have sales momentum)
It shows that for retailers like JB Hi-Fi with a strong concentration on a limited range of electronic products, high selling periods like Christmas, are vital to the bottom line. Bigger and more diverse retailers, such as Woolies do show a seasonal bias to the first half but do have stronger second halves.)
Chief executive Richard Uechtritz says the company plans to move deeper into the just introduced computer category with the rollout to most stores to be completed by the end of fiscal 2007.
“There is no reason why we can not be a substantial player in this large and growing market,” he said.
There they will run head long into Gerry Harvey through his two chains, Harvey Norman and Domayne, as well as Woolies Dick Smith and Tandy chains. Should be a battle royal.
Mr Uechtritz said most categories were solid over Christmas with DVD, games and portable audio very strong.
“We are pleased with another strong result with solid Christmas sales, our new stores traded well and we continue to grow our national market share,” he said.
“Sales in January were soft, however sales to date in February have been in line with expectations and we are comfortable with analysts forecast for the full year profit.”
The company said that the proposed acquisition of the 11 stores of the New Zealand chain Hill & Stewart was on track to happen on the first of next month.
It now has three leases in Auckland for JB Hi-Fi stores, with other potential sites under negotiation.
