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| JB Hi-Fi weathers the retail blues |
   
Posted Date: 08/08/2011
By Robert Stockdill
JB Hi-Fi has posted record “normalised” sales and profit, proving the retail doomsayers wrong.
After excluding a one-off hit announced back in February of $24.7 million relating to the closure of its Clive Anthonys electrical goods chain, the company reported a $134.4 million after-tax profit, up 13.3 per cent over 2010.
Sales grew 8.3 per cent overall, but the key same stores figure fell 1.2 per cent, no doubt reflecting deflation in the electrical goods sector and the ongoing fall in music sales as customers switch to digital.
CEO Terry Smart described the result as pleasing in a “challenging period for retail”.
“It is a testament to the strength of our brand, our systems and processes and the quality of our people in driving this result,” said Smart in a statement to the ASX.
Responding to the increasing pressure on the category from digital music and movie streaming and online shopping, the retailer today announced a new ‘JB Hi-Fi Now’ digital music streaming service due for launch in the last quarter of the current calendar year.
It will be launched in a staged rollout across Apple and PC formats with between 6 million and 8 million tracks from 100,000 artists. A mobile solution will follow.
“This new service will leverage off the company’s strong music heritage and is a natural extension to its current physical music sales,” the company said in its ASX statement.
“The service will allow for unlimited access and listening to music from your Mac, PC or mobile device,” said Smart.
On the online front, JB says it has continued to refine its offer, with sales for the year up 51.6 per cent, in the second half 68.1 per cent. The company saw 800,000 unique visitors on the website in July and Smart says online is “increasingly an important generator for both in store and online sales”.
JB expects a continuing store rollout program to continue to build sales. In the year to June 30 it opened 18 new stores (15 in Australia and three in New Zealand) and converted four Clive Anthonys to the JB banner and offer. Two Clive Anthonys stores have closed leaving just five trading.
Smart says the company will open 16 new stores in Australia in the current financial year and beyond that an average of 13 to 15 per annum.
JB described July, the first month of the new finanical year, as challenging with JB-branded store sales up 6.4 per cent and comp store sales down 3.3 per cent.
“While we anticipate the market will remain challenging, we will continue to focus on driving market share growth through our core strengths of everyday low prices, great people and our low cost of doing business,” said Smart.
“When combined with the opening of 16 stores, the maturing of recently opened stores and our continued online focus, we are well positioned to maximise growth through the next 12 months.”
The company is projecting annual sales in the 2012 financial year of $3.2 billion, an increase of eight per cent on 2011. |
Monday, August 08, 2011 by Mark Schroeder
When comp store sales falling by "only" 1.2 per cent is enough to prove the doomsayers wrong, it looks like, well, the doomsayers might be right.
Retailers used to aspire to comp store growth!
Monday, August 08, 2011 by Robert Stockdill
That was our 'spin' so to speak, Ashley: Yes the growth is being driven by store rollouts, but the comp sales only fell 1.2 per cent - given the deflation in flat screen TV prices and other goods, the move to digital downloads, etc, etc, that in our book is proving the detractors wrong. For now, at least., We'll see where the chain heads over time. - Robert
Monday, August 08, 2011 by Ashley
Seems that the real story is that even this much-touted darling of the retail industry is feeling the pinch - real sales are down, but their profits are up only due to expansion through the opening of new stores. As long as they have more sites to roll out and a not-quite-yet-saturated market they'll show growth - but to say the doomsayers are wrong based on these results is pure spin.
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