JB Hi-Fi full-year results: Retailer’s profit up 7.1% to $250 million

Music and DVD sales continue to fall, but JB Hi-Fi has avoided the retail woes for now with a better-than-expected profit result.

JB Hi-Fi has defied the retail doom and gloom and reported a better-than-expected profit with the help of strong sales of hardware items such as mobile phones, computers and audio equipment.

The downwards trend of music and DVD sales has continued, however, as the electronics and white goods retailer’s net profit rose 7.1 per cent to $249.8 million.

And although DVDs and CDs have continued to fall in the face of streaming services, chief executive Richard Murray says vinyl records are booming.

“The growing area is vinyl which (shows) people like to own things and touch and feel, and I think that does sometimes get lost in the conversation,” he told news.com.au.

“That’s what the power of retail moving forward is — you’ve got to have a great online offer, you’ve got to have great in store offer. And we think that is very powerful.

“There’s no doubt people are streaming more than ever before, but I think people like to collect things and own things.

“And there’s nothing like a vinyl record — it’s a unique sound and people who are passionate about music love vinyl.”

RELATED: David Jones value cut by another $437 million

RELATED: NAB declares ‘grim’ retail sector in recession

The profit result was buoyed by strong end-of-financial-year promotional sales.

“It was a solid result for JB Hi-Fi Australia and a particularly pleasing finish to FY19 with strong sales in the key tax-time promotional period,” Mr Murray said.

Sales for the business’s largest division consisting of games, smart home devices and fitness equipment rose 4.1 per cent to $4.73 billion.

CEO Richard Murray said it was a solid result. Picture: Stuart McEvoy/The Australian.

Comparable Australian sales rose 2.8 per cent, and the only downside to the June success was JB Hi-Fi started the 2020 financial year low on some stock, the company told investors on Monday.

July sales suffered as a result, but JB-Hi-Fi has nonetheless flagged FY20 group sales of $7.25 billion — an increase of about 2.2 per cent.

“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.

JB Hi-Fi shares surged as much as 13 per cent at the start of trade before giving up some of the gains.

At 1046 AEST, they were $1.665, or 5.95 per cent, higher at $29.625.

The Good Guys whitegoods chain lifted sales 2.2 per cent to $2.25 billion, while New Zealand JB-Hi-Fi stores increased sales 2.0 per cent — and 8.2 per cent on a comparable basis — to $NZ236.2 million.

RETAIL RECESSION

The NAB business survey declared in June the nation’s retail sector was “clearly in recession” as beleaguered department store chains David Jones and Myer continued to report poor sales results and closures.

In the figures, the NAB index of business conditions dropped two points in May, leaving it well below the long-run average.

Speaking on the NAB Economics podcast, NAB group chief economist Alan Oster agreed with the proposition that the Australian retail sector was now “GFC-level terrible”.

“Retail is really, really doing it tough, and it’s getting worse,” he said.

The retail sector has been plagued with multiple company closures in the past two years, but Mr Oster said conditions had deteriorated sharply over recent months.

“While the retail industry has lagged the other sectors for some time, the recent deterioration has seen conditions in the industry fall to levels not seen since the GFC,” he said.

“This suggests that the consumer remains highly cautious with anything but spending on essentials because of ongoing slow income growth, high debt levels and possibly some concerns over falling house prices.”

Mr Oster did not want to “overemphasise” the doom and gloom in the sector but said “readings of -27, which we’ve got in retail, is so grim”.

Figures showed consumers in Australia were reluctant to spend, and the recently elected Morrison Government would need to deliver on its promised tax cuts to stimulate the economy, Mr Oster said.

JB HI-FI’S SOLID FY19

• Revenue up 3.5 per cent to $7.095b

• Net profit up 7.1 per cent to $249.8m

• Final dividend up 5.0 cents to 51 cents, fully franked.

—with AAP

Continue the conversation on Twitter @James_P_Hall or [e-mail]