‘A lot of great work’: JB Hi-Fi CEO shares highlights from FY19
JB HI-FI Group improved annual net profit and group sales for the seventh year in a row in FY19, despite the challenging retail environment felt by many during the election cycle.
This improved result was felt across JB HI-FI’s Australian and New Zealand business, as well as homewares retailer The Good Guys, which cumulatively saw NPAT up 7.1 per cent to $249.8 million, and sales reach $7.1 billion – 3.5 per cent higher than FY18.
Murray also pointed to a strong online showing – which grew at 23 per cent year-on-year, now making up 5.5 per cent of total sales – though maintained that the company’s physical stores remained incredibly important to its overall health.
“We’ve been doing a lot of great work. I think 23 per cent growth over a number of years is pretty solid growth,” Murray told Inside Retail.
“What’s most important to me is that we’re growing online, but doing it in a way that doesn’t damage the store network.
“We’re not trying to have one at the expense of the other. You get the same price in-store, you get the same price online. I want to make sure that customers get a great outcome shopping at JB whichever channel they shop in.”
Additionally, while the business isn’t rolling out as many stores as it has previously, it is looking at each new opportunity as a chance to learn. For example, the big-box retailer opened its first small-scale stores in Sydney’s Virgin and Jetstar domestic terminals.
The lesson learned? The JB HI-FI formula works just as well when shrunk down.
“We can run a 75sqm store and make money. [That is] an incredibly small footprint store relative to our normal stores,” Murray said.
“Obviously, for us that is interesting, because if you can make a 75sqm store work, and a 1200sqm store work, what are the options in between?”
Murray stopped short of saying JB HI-FI would invest into further smaller-format stores, as has been seen by the likes of Coles, Woolworths and Ikea, but told Inside Retail it is something the management team thinks about often.
“We need to make sure that all of our stores remain productive, and that we find the right store size for the right location,” Murray said.
Turnaround in NZ
While JB HI-FI has almost 200 stores in Australia, it holds a comparatively slim market share in New Zealand at only 14 stores. However, Murray maintains that the electronics retailer is in fourth position in its only overseas business, and holds some of the highest-turnover stores in the New Zealand market.
“You have two strong competitors in Noel Leeming and Harvey Norman, and they’re turning over [approximately] $700 million each. Our presence is smaller, so therefore our market presence is smaller,” Murray said.
“The best decision we made [in New Zealand] was putting Cherie Kerrison as managing director. That’s been terrific. I think the results we’ve achieved since she started in October have been really pleasing.
“We’re a year into a [multi-year] turnaround program, so we’ll see how we go,” Murray said.
Despite the improving performance from the New Zealand side of the business, Murray said JB HI-FI has no plans to expand into other international markets.