JB Hi-Fi projects drop in annual profits

Published on Fri, 27/04/2012, 03:21:09

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By Claire Reilly

JB Hi-Fi has announced that it expects its annual sales results for the 2011-12 financial year will be in line with forecasts, predicting sales of $3.1 billion for the year following a strong January-March quarter.

According to a Trading Update released by the company today, sales for the three months were up 8.8 per cent (7.5 per cent including Clive Anthonys stores), while comparable store sales were -1.3 per cent, up from -2.2 per cent at the half-year mark in December.

The expected $3.1 billion sales result will be a slight increase on 2011 when the company reported annual normalised sales of $2.96 billion.
However, the company has also issued a profit guidance of $100 to $105 million after tax, which is down on last year. In 2011, JB announced statutory net profits after tax of $109.7 million (or $134.4 million when the company’s one-off Clive Anthonys restructuring charge was excluded). Once again, the 2011 figures were below the previous year's, when statutory profits for FY2010 were $118.7 million after tax.

Despite this, JB Hi-Fi CEO, Terry Smart, said the projected results are strong considering the tight retail market.

“The market remains very competitive but, with our core everyday low price (EDLP) message central to our customer proposition, we have maintained our market leading position,” said Smart. “We anticipate that this level of discounting will continue over the next quarter but we do not believe that this is a long term structural change.

“While the impact on our earnings is clear, as a market leader with an everyday low price proposition, JB Hi-Fi will react aggressively to maintain our market leadership.

“Our low cost of doing business is one of our core competitive advantages and enables us to operate at healthy profit margins notwithstanding competitor activity. This is driven by high sales per square metre and an obsession with not letting waste and inefficiency creep into our cost structure.

“Over the March quarter we improved our cost of doing business percentage over the same period last year.”

One incredibly strong area for JB Hi-Fi was online, with the company reporting a 76 per cent increase in sales on the prior period to 31 March 2012, and an average of 965,000 unique website visitors per week. The company also reported that its digital streaming music service, JB NOW, “continues to gain traction” following the launch of dedicated mobile apps for the service this month."

“We believe the combination of online and digital delivery will provide the most compelling out of store experience to match the success of our in-store program,” said Smart. “The continued success of our recently opened stores combined with our growth online and expansion into digital services will see us continue to grow into the future.”


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