JB Hi-Fi, Super Retail Group Buoyed by Strong Online Performances

The online retailing boom continues to show up in trading updates from major chains.

Last week we saw very positive figures from Premier Investments and The Shaver Shop, with a similar bullish set of figures from automotive add ons group, ARB.

We have seen solid updates from shoe group, Accent furniture chain, Nick Scali and, in December, Beacon Lighting, and in each case strong gains in online sales were reported.

Yesterday electronics and homewares chain JB Hi-Fi and automotive, lifestyle and sport products retailer Super Retail Group released updates for the December 30 half year showing big gains, albeit slightly slower than in the closing months of the June 30, 2019-20 year.

JB Hi-Fi told the ASX that sales were up 23.7% to $4.94 billion during the December half while earnings before interest and tax (EBIT) surged 75.9% to $462 million thanks to tight margin and cost control over the period.

The group said net profit for the half would be 86.2% higher $317.7 million.

The news saw the shares jump to a new peak of $55.25 before they eased  to close at $52.70, but 3.8% up in a wider market that sold off. They are still well below the all time high of $55.25.

Online sales were a major driver of the growth, up 161.7% to $678.8 million during the half, or 13.7%  of total sales (above the industry wide share of 11.1% in November, according to data from the Australian Bureau of Statistics).

But online sales growth looked good because it was coming off a low base, the comparison this half year with the same period of 2019-20 (when online sales boomed) will be harder to show a similar gain.

The strong half year result was some way off the sales momentum JB Hi-Fi had recorded between July and September of last year

At its October annual general meeting, JB Hi-Fi told investors its sales growth during the first quarter had been 27.3% so it would seem there was a slowing in the rapid sales pace towards the end of 2020.

“We are pleased to report record sales and earnings for HY21, in what has been an extraordinary period,” chief executive Richard Murray said in the statement to the ASX

“Our continued focus on the customers, and investments in our online business and our supply chain, have enabled us to seamlessly meet our customers increased demand both instore and online,” Mr Murray said.

“The Group did not receive any government wage subsidies and continued to pay landlords and team members throughout the half, including the periods where stores were temporarily closed.

That’s a big contrast to Premier Investments which received tens of millions of dollars of JobKeeper payments and kept them.

Comparable sales at The Good Guys (a mostly whitegoods and big homewares product chain) rose 26.1% with JB H-Fi Australia’s comparable figure up 26.4%.

JB Hi-Fi New Zealand increased comparable sales by 9.1%.

The company said there had been strong improvements in gross margins in key categories, particularly at The Good Guys, though this had been offset by sales mix in JB Hi-Fi Australia and JB Hi-Fi New Zealand.

The company’s full first-half results are due on February 15.

No mention of a dividend but a big increase seems in store for the second year in a row.

JB Hi-Fi paid an interim dividend for 2019-20 of 99 cents a share and a final of 90 cents.

They were up from 51 cents and 90 cents a share respectively in 2018-19.

……..

Super Retail Group also joined the queue of retailers revealing very strong December half year sales and earnings performances.

The Brisbane-based company revealed that first half year sales increased 23% over the December, 2019 half and 24% on a like for like basis.

Thanks to margin expansion (ie, higher profits). Super Retail’s normalised net profit after tax is expected to be in the range of $174 million to $177 million, a rise of between 135% to 139% increase on the first half of 2019-20.

The owner of Rebel Sport, Supercheap Auto, and BCF told the ASX that total revenue for the half rose to $1.78 billion, with online sales surging 87% to $237 million, representing 13% of total group sales (Similar to what JB Hi Fi also reported yesterday).

The online sales growth looked good because it was coming off a low base. The comparison this half year with the same period of 2019-20 (when online sales boomed in the first lockdown) will be harder to show a similar gain.

Based on this performanceSuper Auto told the ASX that it  now expects to deliver Statutory net profit after tax of between $170 million and $173 million and Normalised NPAT (pre-AASB 16) of between $174 million and $177 million in the period.

That will be between 196% and 201% up on the figure for the December, 2019 half.

“The result excludes $1.7 million received in JobKeeper wage support which will be returned to the Australian Government,” the company revealed

“With continuing uncertainty in the economic outlook and the ongoing risk of COVID-19 lockdowns impacting store trading, year-to-date performance should not be treated as an indicator of full year performance,” directors cautioned.

The group’s segment earnings before interest and tax (EBIT) for the period is now expected to be between $253 million and $256 million.

Directors said that sales in its Macpac division “were significantly impacted by government-mandated store closures in key markets of Melbourne and Auckland relating to COVID-19. Excluding the impact of these store closures, Macpac delivered six per cent like-for like sales growth in the period..

CEO Anthony Heraghty said in the statement on Monday:

“Since our last update to the market in October, the Group has continued to perform well. We are particularly pleased with our record online sales over the November cyber weekend and strong Christmas trading. This has culminated in a record first half performance for the Group.

The shares rose more than 3% to $12.40, then eased in afternoon trading to close down 1% at $11.63.

Like JB Hi Fi there was no mention of an interim dividend, but the booming result opens the door for a significant rise after the company suspended an interim for 2019-20 because of the impact of the pandemic.

Super Retail paid a final for that year of 19.5 cents a share.

 

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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