JB Hi-Fi rides pandemic boom for record sales and profits

Retailer JB Hi-Fi has hailed an ‘extraordinary’ period of surging earnings in the pandemic, as it nearly doubles its dividend.

A JB Hi-Fi store in Brisbane. Picture: AAP

JB Hi-Fi chief executive Richard Murray believes a ‘second wave’ of people preparing for extended periods of working from home and setting up refurbished home offices kitted out with updated technology, will help underpin earnings growth in 2021.

Added to that is the strengthening housing cycle and pace of home renovations that all point to JB Hi-Fi’s product range representing a staple purchase more than ever before.

And while consumer confidence might take short, limited hits due to the spate of sudden lockdowns caused by the COVID-19 pandemic, such as the current measures in Victoria and New Zealand that have shut 90 of its stores, there would be enough pent up demand and cash around the economy to promise a quick bounce-back from these shutdowns.

JB Hi-Fi and its stablemate chain The Good Guys struck a wave of demand from stuck at home and cashed up consumers locked down in their homes in the second half of 2021, with shoppers grabbing mobile phones, TVs, computers, fridges and kitchen appliances to generate record sales and earnings for the consumer electronics retailer.

The shopping boom fuelled by a mix of wages subsidies, early access to superannuation and the shut down of overseas travel has filled JB Hi-Fi and its stablemate The Good Guys’ coffers which has also poured into shareholders’ pockets with a near doubling of the interim dividend for the December half. The fatter dividend payment was achieved without JB Hi-Fi pocketing any JobKeeper wage subsidies during the period.

JB Hi-Fi on Monday kicked off reporting season for the major retail chains when it released its half-year results that confirmed the bumper trading update provided in January which revealed the retailer was experiencing unprecedented sales and profitability since the COVID-19 pandemic emerged.

The consumer electronics chain announced sales were up 23.7 per cent to $4.9 billion as net profit rose 86.2 per cent to $317.7 million. JB Hi-Fi said group online sales were up 161.7 per cent to $678.8m, reflecting the huge boom in online shopping through the pandemic.

Investors will share in the massive profit uplift, with JB Hi-Fi announcing the interim dividend would be lifted 81.8 per cent to $1.80 per share, payable on March 12. It is the latest company to sharply lift its dividend following a record half-year performance. Furniture chain Nick Scali also recently ramped up its dividend payment, setting the scene for other retailers that have enjoyed strong conditions to offer similarly high lifts in dividends to shareholders when they report over the next two weeks.

Mr Murray said he was confident the robust trading conditions booked in the December half would push into 2021, especially as home offices set up quickly when COVID-19 emerged last year could now be further upgraded and refined as people adopt new work patterns that include a long-term working from home plan.

“I think many of our products are absolutely staple purchases now, more so than ever before, and I think more people are going to be working from home than ever before so actually a number of home offices are about to go through upgrades so people will start to say if I am going to work two days a week from home I want a decent chair, I want a decent desk, a scanner, a decent monitor.”

This was showing up in December half sales as demand for key home office and other entertainment products remained strong well after the initial COVID-19 breakout in March.

The company said that JB Hi-Fi Australia total sales grew by 23.3 per cent to $3.36bn with comparable sales up 24.2 per cent. Sales momentum was strong through the half, with continued elevated customer demand for consumer electronics and home appliance products. The key growth categories were communications, computers, visual, games hardware and small appliances. Online sales grew 201.9 per cent to $515.6m or 15.4 per cent of total sales. At its The Good Guys chain, total sales grew by 26.4 per cent to $1.45bn, with comparable sales up 26.4 per cent. Sales momentum was strong with continued elevated customer demand for home appliance and consumer electronics products. The key growth categories were refrigeration, portable appliances, laundry, floorcare, televisions and computers.

Mr Murray said he had confidence in the business over the next few years as broader economic trends such as the strength of the housing market and a continued pace of home renovations bolstered its sales.

Turning to outlook the company said in January total sales growth for JB Hi-Fi Australia was 17.3 per cent with comparable sales growth of 18.6 per cent. Total sales growth for JB Hi-Fi New Zealand was 21.7 per cent with comparable sales growth of 21.7 per cent and total sales growth for The Good Guys was 14.1 per cent with comparable sales growth of 14.1 per cent.

Shares in JB Hi-Fi ended on Monday up 3 per cent at $52.44.

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‘An extraordinary period”. JB Hi-Fi CEO Richard Murray. Picture: AAP