JB Hi-Fi's has announced record financial results for the first half of its 2017 financial year. Total sales were up by 23.6%, reaching $2.6 billion and net profit jumped by 21.7% to $124.4 million. The downfall of Dick Smith Electronics helped boost JB Hi-Fi's results. Read on for more details.
The financial results reflected earnings from both Australia and New Zealand; there are 302 JB Hi-Fi stores across both countries. It also included results from The Good Guys, which was acquired by JB Hi-Fi last year. While sales in New Zealand were down by 1.7% to NZ$125.1 million, Australia's results more than made up for the loss. Here are some key highlights from JB Hi-Fi's overall financial results from June to December 2016:
- Total sales were up by 23.6% to $2.6 billion
- Underlying earnings before interest and tax (EBIT) was up by 30.9% to $180.8 million
- Underlying net profit after tax (NPAT) was up by 31.7% to $125.4 million
- Gross profit increased by 13.2% to $496.5 million with gross margin at 22.2%
- Cost of doing business (CODB) went down to 13.9%, largely due to the sale of the business.
- Online sales grew by 40.4% to $84.8 million, accounting for 3.8% of total sales.
The strong results were partly attributed to the demise of Dick Smith Electronics (DSE) during 2016:
"As previously highlighted, the closure of DSE during the second half of FY16 has contributed to an increase in JB HI-FI sales in the first half of FY17; however the impact will moderate as we cycle through their decline and eventual market exit."
The key growth categories in terms of sales for JB Hi-Fi were:
- Communications (think mobile phones)
- Home appliance
The home appliance category reflects JB Hi-Fi's acquisition of The Good Guys as part of the company's strategy to make a mark in the home goods department. The acquisition was completed in November last year.
In Australia, hardware and service sales were strong, jumping by 15.8%. Software sales - on the other hand - declined once again, this time by 9.4%. In the last financial year, software sales were already down by 5.4%, driven by the trend towards digital media distribution such as Netflix, Spotify and Steam.
JB Hi-Fi expects total sales figures to be around $5.58 billion and NPAT to be between $200-$206 million by the end of the current financial year.
The Dick Smith of my childhood was a magical place. Gazing with wide eyes at the gadgets and gizmos around me, I was resigned to never owning them but found satisfaction in looking and dreaming. The store that I visited this week was a pit of despair and humiliation, as consumers picked the bones of the carcass and workers faced the end with resigned apathy.