Economy’s in good shape, says JB Hi-Fi boss, as profit surges

Australians have money to spend and retailer JB Hi-Fi is reaping the benefits, flagging an 86pc spike in first half profits.

The JB Hi-Fi group employs around 13,000 team members across 314 stores.

JB Hi-Fi chief executive Richard Murray believes the Australian economy is in “remarkably” good shape despite the pandemic, with government stimulus and personal savings balances providing a soft landing.

He said consumers certainly had “money to spend” and were filling their homes with TVs, computers, fridges and new mobile phones.

Mr Murray was speaking after the consumer electronics and whitegoods retailer unveiled a bumper first half trading update that included a forecast 86 per cent spike in December half profits.

He said JB Hi-Fi had also benefited from the estimated $60 billion a year Australians typically spend on overseas travel, which is now being redirected into households.

“I think Australians not travelling overseas and I guess also saving, with savings rates up, is more material than early withdrawal of superannuation, it is $60 billion of travel a year and on top of that and I think what the government stimulus has also done well is soften the landing,” Mr Murray told The Australian.

“No doubt there will be volatility continuing into 2021. As much as we don't want it, I’m sure there is, but I think the economy is in a remarkably good position given the amount of things that have been thrown at it.”

Mr Murray said the retailer’s business, which includes The Good Guys chain, had enjoyed strong sales across all categories, which he had never witnessed before.

JB Hi-Fi CEO Richard Murray. Picture: AAP

Earlier, JB Hi-Fi said its preliminary, unaudited half-year net profit after tax blasted 86.2 per cent higher, to $317m. This compared to the same time last year, before pandemic restrictions swept Australia and hammered businesses.

In midmorning trade, JB Hi-Fi’s share price was up 4.8 per cent at $53.20.

The preliminary results come as the retailer has squeezed far larger profit growth from its sales, which lifted 23.7 per cent to $4.94bn, according to the unaudited figures.

Recent acquisition The Good Guys led the charge, with shoppers scrambling for any whitegoods not tied down. Earnings at The Good Guys lifted 142 per cent to $126.5m.

This helped drive JB Hi-Fi’s overall earnings up 75.9 per cent to $462.7m.

Unlike many other retailers across the economy, JB Hi-Fi’s profit surge came without reliance on any support from the federal government’s JobKeeper guarantee scheme.

The JB Hi-Fi group employs around 13,000 team members across 314 stores.

JB Hi-Fi represents the lion’s share of the retailer’s footprint, with 195 stores in Australia and 14 in New Zealand.

The Good Guys, which JB Hi-Fi acquired in 2016 for $870m, boasts 105 stores.

The group also continued to pay all rents as well as the wages of staff from its stores which were temporarily closed as a consequence of COVID-19 control restrictions.

Online sales outperformed, growing 161.7 per cent across the group in the half year, as the pandemic redrew operational lines across the retail landscape.

The pandemic push saw online sales capture 13.7 per cent of the retailer’s total sales, for a total of $678.8m.

Mr Murray said the sales figures represented a stellar result in an extraordinary period.

“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.

The strong half-year results come after JB Hi-Fi late last year flagged a near 30 per cent jump in sales at its stores in the period of July to September.

At the time the group declined to issue 2021 sales guidance.

JB Hi-Fi’s interim audited statutory results are due on February 15.