Shares in JB Hi-Fi hit an all-time high yesterday after the company revealed a solid 2018-19 result and outlook for 2019-20.
The shares reached a high of $31.60 in early trading in what was an enthusiastic reaction to the result. The shares later eased but still ended the day up 9.9% at $30.75.
Investors chased the shares in part, not because of the result and higher dividend, but because many were short the stock as they waited for a worse than reported set of figures (which some analysts had predicted).
That proved not to be the case and the shorts were forced to cover some of their positions as the shares surged at the opening. Once the early rush faded the shares settled back to what was still a strong one day gain.
JB Hi-Fi revealed a 7.1% increase in profits to $249.8 million for the year to June on a 3.5% rise in revenues in Australia and New Zealand at $7.1 billion.
Total dividends have increased to $1.42 a share, up 10 cents from last year. The final is a fully franked 51 cents a share.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 4.2% to $429.1 million and topping market forecasts of a more modest 2.3% increase.
CEO Richard Murray described it as a “solid result” for the retailer but pointed to potential variables in the coming financial year, predicting slightly more subdued revenue growth of 2.1% for 2020 to around $7.25 billion: most of that will come by JB Hi-Fi Australia with only modest rises predicted from New Zealand and the Good Guys chain of whitegoods stores in Australia.
“Whilst we continue to see variability in the sales environment, we enter FY20 confident in our ability to execute and grow market share and look forward to another successful year,” Mr. Murray said in yesterday’s statement.
So far in the first month of 2019-20, JB Hi-Fi says it’s done OK. Total sales growth for JB HI-FI Australia was 4.1% (July 2018: 2.9%) with comparable sales growth of 3.2% (July 2018: 0.3%); total sales growth for JB HI-FI New Zealand was -0.4% (July 2018: -2.1%) with comparable sales growth of -0.3% (July 2018: 3.4%); and total sales growth for The Good Guys was -2.1% (July 2018: 2.7%) with comparable sales growth of -3.4% (July 2018: 1.4%).
The Australian operations were again the core driver of the result with total sales growing by 4.1% to $4.73 billion, with comparable sales up 2.8%.
“The key growth categories were Communications, Audio, Fitness, Games Hardware and Connected Technology. Online sales grew 23.0% to $258.0 million or 5.5% of total sales, as the Online offer continues to evolve. The Solutions business recorded double-digit sales growth and remains on track to deliver on the longer-term aspirational sales target of approximately $500 million per annum, through both organic growth and strategic acquisitions.’
Total sales in NZ were up 2.0% to $NZ236.2 million, with comparable sales up 8.2%. “The key growth categories were Communications, Fitness, Audio and Small Appliances. Online sales in New Zealand grew 38.3% to NZD13.3 million or 5.6% of total sales as the business benefited from the improved Online platform. Gross margin was down 37 bps on the PCP at 17.3% and CODB was 16.7%, down 57 bps on the PCP. EBIT was (NZD1.9 million), up NZD1.0 million or 34.3% on the PCP,” the company said.
And at The Good Guys, total sales grew by 2.2% to $2.15 billion, with comparable sales up 0.9%. “The key growth categories were Refrigeration, Laundry, Dishwashers, Televisions, Communications, and Computers. Online sales grew 3.7% to $130.9 million or 6.1% of total sales, with strong sales on The Good Guys website partially offset by a decline in third-party marketplace sales,” the company said yesterday.