Investors were not head over heels enthusiastic about the full year figures from electronics retailer, JB Hi-Fi which contained the first solid contribution from The Good Guys chain which was bought last year for $870 million.
Yes, sales and earnings were up, but so far as actual performance is concerned, JB Hi-Fi did OK, The Good Guys sort of OK.
Shareholders were rewarded – JB Hi-Fi the final dividend was lifted to 46 cents a share from 37 cent previously, taking the full year payout to $1.18.
And in the early weeks of 2017-18 both groups seem to be having a better time on the sales front, according to the update contained in yesterday’s results.
JB said full-year profit rose 13.3% to $172.4 million in the year to June 30 with revenue up 42.3% to $5.63 billion following November’s acquisition of The Good Guys. Underlying profit, which strips out acquisition costs, jumped 36.5% to $207.7 million and comparable sales, which removes new store openings, grew 8.6% in the 12 months to June 30.
The shares dipped 3.7% to $24.41, closing on their lows for the day.
JB Hi-Fi shares have fallen 9.5% this year – mainly because of fears about the longer term impact of Amazon’s arrival – and are trading below the issue price ($26.20) for the company’s $394 million entitlement issue last September which helped fund The Good Guys buy.
Looking to 2917-18 JB Hi-Fi expects sales to reach $6.8 billion as it books a full year of sales from The Good Guys. It saw solid sales growth in July (up 6.8% in total and 5.8% on a comparable stores basis) but management now say the synergies from integrating The Good Guys with its own operations will be at the upper end of the $15 million to $20 million it anticipated and will be delivered a year earlier than expected.
Chief executive Richard Murray said 2016-17 was a strong year for the group and the positive sales momentum had continued into the 2018 financial year.
"The July sales results in both the JB HI-FI and The Goods Guys businesses are pleasing, especially in light of the strong sales growth in the prior year," he said.
“We are clear on our objectives for 2018 and feel we have good momentum heading into the important Christmas trading period,” he said.
JB Hi-Fi Australian stores saw near 11% jump in total sales, or 8.6% on a comparable store basis. The Good Guys’ total sales were up 0.2% to $1.26 billion, but comparable sales were down 1.3% in the seven months JB Hi-Fi has owned the business. That comparable store growth is now positive.
Its gross profit margin was up 16 basis points to 22.24% and important metric, the cost of doing business was down 21 basis points to 14.96%. Its retail margin grew from 5.89% to 6.33% which is, for a discount retailer, pretty good and would satisfy someone like Woolies or Coles.
And despite all the comment about Amazon, JB grew its online sales 35% to $159 million in the year (that’s just under 4% of its total Australian sales). The Good Guys online sales were up and reached $64 million or 5.1% of total sales. More than $220 million in online sales means the combined group is starting to get some momentum.
The group’s hardware and services sales were up 14.4% from a year ago and the key growth products, including phones, stereos, cameras and home appliances, rose 11.9%. Sales of CDs, DVDs and games continued to drop – down 9.1% or 10.7% on a comparable store basis.
