JB Hi-Fi sales slide to hit earnings, profit

The electronics retailer will post lower first-half earnings and profit after sales fell across the group amid ‘challenging circumstances’.

JB Hi-Fi chief executive Terry Smart says it’s a strong result given the pandemic challenges.

Electronics retail giant JB Hi-Fi’s has flagged first-half earnings and net profit will be down more than 9 per cent after sales fell for the six months to December 31.

But JB Hi-Fi shares surged on the update — which showed stronger momentum than the market had feared — jumping 7.2 per cent to $49.98 in early trade.

Unaudited results show total sales at $4.86bn, down 1.6 per cent on the prior corresponding period, but up 21.7 per cent on a two-year period comparison.

Online sales for the group, which also includes The Good Guys chain, soared by 63 per cent to $1.1bn during the period, representing 22.7 per cent of total sales.

The group said earnings before interest and taxes came in “strong” at $420.5m, down 9.1 per cent on the same period last year, but up 59.9 per cent over a two-year period with significant operating leverage “driven by the elevated sales growth, management of gross margins and disciplined cost control”.

Net profit after tax is likely to fall 9.4 per cent to $287.9m, from $317.7m in HY21.

The group recorded negative sales growth across its Australia, NZ and The Good Guys operations for the first half, compared to the prior corresponding period.

JB Hi-Fi referred to challenging circumstances, which are understood to reference the lighter footfalls in stores and staff shortages as the retail sector bore the brunt of a surge in Covid-19 cases related to the faster-spreading Omicron variant.

Second quarter Australian comparable sales were 1.2 per cent higher with total sales up 1.9 per cent compared to the weaker previous quarter, and up more than 23 per cent on the prior corresponding period in FY20.

The second quarter was also better for The Good Guys chain, but sales growth dipped in the NZ market.

“We are pleased to report strong sales and earnings for HY22,” group chief executive Terry Smart said.

“In challenging circumstances, we have again demonstrated our ability to adapt and respond to meet the strong demand from our customers, both in-store and online.”

He also thanked JB Hi-Fi’s 13,000 team members for continuing to work tirelessly through a difficult period.

“As the challenges associated with Covid-19 continue, the health, safety and wellbeing of our team members, customers, business partners and the wider community remain our highest priority.”

The group will release its half year audited statutory results on February 14.

Shares in the $5.4bn group last traded at $46.64.

JB Hi-Fi’s update comes a day after retail investors were warned to brace for more Omicron impacts on earnings.

Wesfarmers on Monday warned of softer trading conditions with customer traffic to stores impacted by rising community transmissions of Covid-19 in some states, particularly during the Christmas trading period.