JB Hi-Fi Ltd (JBH)

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17 August 2020

Results 

Full Year 2020

Full Year 2019

Change

Total Sales Revenue ($m)

7,919

7,095.3

+11.6%

JBH Australia Sales ($m)

5,319

4,726

+12.5%

Underlying EBIT ($m)

486.5

372.8

+30.5%

EBIT Margin (%)

6.14

5.25

+89bps

Underlying Net Profit After Tax ($m)

332.7

249.8

+33.2%

Statutory NPAT ($m)

302

249.8

+21%

Final Dividend ($)

0.90

0.51

+78%

JB Hi-Fi (JBH) sales & profits grow as Covid-19 keeps Aussies at home 

What happened?

  • Retailer, JB Hi-Fi (JBH) has reported solid improvements to total sales and earnings for the past year. Sales revenue lifted 11.6% to $7.9 billion with total online sales 48.8% higher at $597.5 million. Underlying earnings before interest and tax (EBIT) improved 30% to $486.5 million and underlying net profit after tax (NPAT) rose 33% to $332.7 million. Statutory NPAT, which takes into account one-off items and the change in accounting standards, was 21% higher.
  • JBH is paying a fully franked final dividend of $0.90 per share on 11 September 2020 with an ex-dividend date of 27 August 2020.

Why did it happen?

  • The lift in total sales was driven primarily by the performance of its Australian JB Hi-Fi stores, which makes up two-thirds of all sales. Australian sales grew 12.5% to $5.3 billion while comparable sales increased 12.2%. Sales lifted more broadly as Australians spent more time at home, upgrading home appliances and entertainment products. Hardware & services (which excludes movies, music & games software) sales rose 15% driven by computers, communications and small appliances. Movies, music & games software sales actually fell 12%.
  • There was a big boost in online sales for JBH, which jumped 56% to $404 million. Q4 online sales surged 155%, driven by physical store closures from the initial Covid-19 lockdown starting in late March. While the percentage of online sales rose in Australia, it still only represents 7.6% of all sales. The Cost of Doing Business (CODB) also fell 14%, which partnered with the lift in sales, saw growth in profits.
  • JBH’s NZ business saw sales of NZ$222.8 million, down 5.7%. 4Q20 sales were heavily impacted by the stage 4 restrictions which resulted in the temporary closure of all stores. NZ online sales still saw growth of 53.3% to NZ$20.4 million. JBH recognised a one-off impairment of NZ$25.6 million (A$24m).
  • The Good Guys contributed $2.39 billion in sales over the period, up 11.2% on the year before. Comparable sales were up 10.8% for the period with key growth categories being portable appliances, floorcare, laundry, computers and televisions. Online sales strengthened 33% on the Good Guys website with 91% growth in 4Q20. 

Where to now?

  • Due to the uncertainty of Covid-19, JBH has decided not to provide sales guidance for FY21. The retailer did provide an update for July sales. JBH Australia and the Good Guys have both managed to lift total and comparable sales by over 40% for the month. JBH NZ has seen more subdued sales growth of 9.1% for total and comparable sales. 
  • Stage 4 restrictions in metro Melbourne (starting August 6) has seen strong demand for online sales in Victoria and sales growth remains strong across the rest of Australia.
  • The result has been well received by investors with the share price hitting fresh record highs following the announcement. JBH shares have also performed strongly so far in 2020 with its share price advancing ~30% and easily outperforming the broader ASX 200 index’s ~9% decline. 

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