A cautious reaction to a solid trading update from the country’s biggest electronics and whitegoods retailer JB Hi-Fi which says it continues to see strong demand from customers.
According to the update at the week-long Macquarie investment conference in Sydney, JB Hi-Fi saw an acceleration in sales in late March as customers prepared for a potential increase in government restrictions.
This saw the company enjoy an 11.6% increase in total sales and an 11.3% lift in same store sales during the third quarter. This brought its year-to-date sales growth to 6.9% and same store sales growth to 6.4%.
The shares fell, and then edged higher to up 0.5% at $46.21, which wasn’t a bad result given the weakness in the wider market.
JB Hi-Fi said The Good Guys subsidiary saw even better performance recorded total and same store sales growth of 13.9% in the third quarter. This lifted its year-to-date sales growth to 5.4% and 4.9% on a same store basis.
Things weren’t so positive for the JB Hi-Fi’s New Zealand business, which was forced to close its doors briefly in some parts of the country towards the end of the quarter. The majority of these stores are now open as normal. It recorded a third quarter total sales and same store sales decline of 3.3%. Year to date its sales are now down 0.4%.
Sales growth in the March quarter though looks elevated because it compares to the same quarter of 2020 when the pandemic was tightening its grip, with lockdowns across the country and consumers starting to go online to order a host of home products to help them work from home or handle life in isolation.
The current June quarter will see a clear slowing in sales growth because sales accelerated in the same quarter of 2020. For example 4th quarter online sales in 2020 surged 134% which will be hard to top this quarter.
The company said online sales for the 2020 financial year rose 50% over the financial year to nearly $600 million which will again be difficult to repeat in 2020-21.
Happily for shareholders, the company’s strong sales growth in Australia continued into April and early May with JB Hi-FI saying it was “pleased’ with the sales performance in April and May.
However, despite this strong form, management does not intend to reinstate its guidance for FY 2020.
It believes the uncertainty and ongoing disruption to customer shopping patterns as it enters the important end of financial year trading period, means it is not appropriate to provide guidance at this time.
The company’s CEO, Richard Murray (who leaves the company after the August full year results for Premier Investments) said in Thursday’s presentation:
“While the outlook for the remainder of the financial year is uncertain, we continue to be in a strong financial and operational position.”