JB Hi-Fi expecting 20% full year profit jump

JB Hi-Fi has confirmed its status as one of the best retail performers during the pandemic, predicting a 20 per cent annual profit jump.

JB Hi-Fi is expecting a big jump in full-year profit after strong sales during the coronavirus pandemic. Picture: AAP

JB Hi-Fi has confirmed its status as one of the best retail performers during the coronavirus pandemic, saying it now expects total sales for fiscal 2020 to hit $7.86 billion, up from the target of $7.33bn disclosed at its interim results announcement in February.

The consumer electronics chain is also forecasting its net profit for the full year to be in the range of $300 million to $305 million, an increase of 20 per cent to 22 per cent on fiscal 2019, as its tight control of costs and the ramp up in sales flowed through to its bottom line.

The retailer also said it is investigating a scheme to reward its employees in recognition of their efforts during the coronavirus pandemic.

Helping fuel the earnings drive were consumers chasing deals on whitegoods, with JB Hi-Fi’s washing machines, fridges and whitegoods specialist The Good Guys witnessing a massive increase in sales in the early months of 2020 as its same-store sales growth pushed past 20 per cent.

The retailer also said strong cost controls and operating leverage had more than offset the inflated costs from implementing new health and hygiene systems in the wake of COVID-19.

However, the impact to its New Zealand business could see JB Hi-Fi book impairments of $25 million to the value of the business in the 2020 accounts, the company said.

As households went into lockdown and social distancing became the norm across Australia and New Zealand, consumers were grabbing for a range of consumer electronics. JB Hi-Fi witnessed a quick acceleration of its sales in Australia as first half sales of 5.1 per cent rocketed to total sales growth of 20 per cent for the second half to date.

In an update to the market Thursday morning, JB Hi-Fi said that like-for-like sales of 4.9 per cent in the first half rose to 20 per cent for the second half with same-store sales for the financial year to date rallying to 10.7 per cent.

At The Good Guys same store sales growth of 0.6 per cent in the first half increased to 23.5 per cent in the second half to date and for the financial year to date were sitting at 10.3 per cent growth.

Its New Zealand JB Hi-Fi stores were hit by more strict government regulations that saw stores closed, with same store sales of 0.8 per cent in the first half falling to a 19.3 per cent same store sales slump in the second half to date and the financial year to date recording a 7.3 per cent fall in sales.

A cohort of retailers, especially in consumer electronics, furniture and whitegoods, have performed strongly over the last few months despite the heavy restrictions on mobility and home isolation with Harvey Norman on Wednesday releasing its own trading update that showed similarly strong uplift in same store sales over March and April.

JB HI-FI New Zealand has now resumed full trading.

“While the initial sales performance since reopening in New Zealand has been solid, given the ongoing challenging performance and expected continuing uncertainty in New Zealand the group is in the process of reviewing the carrying value of certain JB HI-FI New Zealand assets," the company said in a statement.

“This review is expected to result in a non-cash impairment in JB HI-FI New Zealand of approximately $25 million (post tax) in fiscal 2020. This estimate is still to be finalised and subject to auditor review.”

JB Hi-Fi said it was now targeting full-year total sales of $7.86bn, comprising $5.26bn at JB Hi-Fi Australia, $220m at JB Hi-Fi New Zealand and $2.39bn at The Good Guys.