Australia’s largest home entertainment retailer reported a drop in sales and profit in its latest half-year results.
JB Hi-fi, which also owns The Good Guys, said on Feb. 12 that total group sales had declined by 2.2 percent to $5.15 billion (US$3.36 billion) in the six months compared to the same period in 2022.
But the retailer also announced that the result was better than anticipated by analysts, with the share price jumping on Feb. 12, up 4.49 percent to $59.09 (US$38.47). This is a 20 percent increase since the Black Friday period.
January sales momentum was also better than expected, up 2.5 percent for JB Hi-Fi Australia, and down 2.2 percent for the Good Guys.
The result came as Australians become more conscious about their spending amid the cost-of-living crisis.
The company saw a 20 percent drop of net profits to $264.3 million compared to the same period last year.
JB Hi-Fi Chief Executive Terry Smart said he was pleased with the result.
“As expected, we saw the trading environment become more challenging, marked by heightened competitive activity and increased on-floor discounting,” he told investors.
“There’s a lot of positive talk out there, and that may assist us through this next half, but it’s so much crystal balling.”
Mr. Smart said the company had significantly benefited from Black Friday and Boxing Day sales.
“Retail execution is about staying focused on the retail basics and doing what we do best delivering value and an experience to our customers,” he told investors.
He added that JB Hi-Fi stayed focused on promoting and providing great value to its customers while leveraging its scale productivity to minimise and control costs.
“Our focus remained on maximising customer demand through delivering consistently high levels of customer service and driving best value for our customers,” he said.
E&P Capital retail analyst Philip Kimber said JB Hi-Fi had exceeded expectations by 5 to 6 percent, and that the stronger-than-expected result highlighted the company’s good performance in tough operation conditions.
“There are some positives for investors to take away,” Mr. Gilbert said.
“Sales have topped estimates amidst a tricky environment for retailers, and we didn’t see a sharp slowdown in sales in January that many had expected.”
“Profits have slipped, but this was always to be expected.”
The analyst added that the results “won’t blow the market away.”
“Investors should know that it will be a challenging end to the fiscal year for JB as retail sales slow further, with decade-high interest rates continuing to take their toll on households.”
“However, management has shown they can navigate tough periods, and coming interest rate cuts as early as June will remain a positive tailwind.”
