Retail Not So Breezy the Second Pandemic Around

By Glenn Dyer | More Articles by Glenn Dyer

The lockdowns in Sydney and Victoria (and the tighter one that started in South Australia last night) will make 2020-21 annual reports look out-of-date if the update and comments from electronics and homegoods retailer JB Hi-Fi yesterday is any guide.

While the group saw a very good year to June, as was apparent for most of the 12 months, the latest lockdowns seems to be changing things.

JB HiFi warned that thanks to lockdowns in Sydney and Melbourne it “is expecting some disruption and variability to sales as a result of the various state-based COVID restrictions, particularly following the recent store closures in Greater Sydney and Victoria.”

The company will update that advice with its full year financial report and dividend details next month which will include the impact of the snap full lockdown in South Australia called yesterday.

Like last year, the new lockdowns will make providing guidance to hard for JB HiFi for the December 2021 half 2021 and the June 30, 2022 full year.

In yesterday’s update, JB HiFi said its sales performance in the June quarter was good, but not as good as a year earlier.

The retailer said its sales from April to the end of June had continued to be strong but did not match the exceptional sales growth reported last year through the advent of COVID-19.

Revenue at the company’s Australian division fell 7.8% in the three months to June compared with the June, 2020 quarter.

But they were up 21.2% when compared to the same quarter in COVID-free 2019.

Sales at The Good Guys also dropped 1.5% from the June quarter of last year, but were up 28.3% on the final quarter of the 2019 financial year.

Overall, JB Hi-Fi said full year sales surged from 2020-19, as expected with a consequent big boost to profits.

Revenue for the retailer rose 12.6% for the year to $8.9 billion.

As a result, JBH expects to report earnings before interest and taxes (EBIT) of $743.2 million and net profit after tax of $506.1 million. Both will be a record and represents an increase of 53.8% and 67.4%, respectively, year on year.

That will be very hard to top in 2021-22, even without the dislocations from the current and possible future lockdowns.

“Sales momentum was strong throughout the year, with continued heightened customer demand for consumer electronics and home appliance products,” the retailer said in the update.

Online sales were a saviour, with revenue surging 78%, to $1.1 billion, or 11.9% of total group sales for the year to June.

The results are above analyst expectations for the business and outgoing CEO Richard Murray attributed them to strong cost management and improvements in gross margins (he’s going off to run Premier Investments)

“We are pleased to report record sales and earnings for FY21. Our continued focus on the customer, and investments in our online business and our supply chain, have enabled us to seamlessly meet our customers’ increased demand both instore and online,” he said.

“I would like to thank our over 13,000 team members who have continued to do an incredible job and worked tirelessly throughout this period.

“As I have said before, our team members are our number one asset and our most important competitive advantage; their dedication and deep product knowledge continue to delight our customers every day,” Mr Murray said.

JB Hi-Fi will provide more updates on its current trading at its full-year results on August 16.

The shares rose 3.7% to $49.51.


Similarly, jewellery retailer Lovisa also warned its investors on Tuesday it had seen disruptions due to store closures, with 36 of its stores in Victoria shut and 32 in Sydney closed.

As well Lovisa said stores elsewhere were closed as well, including 8 stores in South Australia temporarily closed as a result of COVID related restrictions announced by the South Australian government effective July 20;

28 stores in Malaysia remaining temporarily closed since early June as a result of the Malaysian government response to escalating COVID cases; and

6 stores in South Africa currently temporarily closed as a result of the civil unrest and rioting the country has been experiencing over the past week, with re-opening subject to the situation being under control, shopping malls re-opening and our team being able to safely return to work.

“All other markets are open and trading, as well as our global online stores,“ Lovisa said.

No figures on the impact of the closures on sales, employment or earnings were provided in the update.

Lovisa shares eased 1.3% to $15.26.


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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