JB breaks billion dollar sales barrier for record profit

By Matthew Henry

SYDNEY: JB Hi-Fi has reported record full-year net profit of $40.4 million from nearly $1.3 billion in sales for the year ending 30 June 2007, with net profit after tax (NPAT) jumping 56 per cent over last year.

Sales grew 36 per cent from $946 million last year, when the retailer banked $25.8 million NPAT.

The result exceeded the company’s own profit guidance in June of $37 to $39 million as the company traded strongly from March to June 2007.

Comparable store growth for the 12 months was 12.6 per cent for JB Hi-Fi stores and 2.7 per cent for Clive Anthonys stores, resulting in consolidated comparable store growth of 11.4 per cent.

Gross margin for the business dipped slightly from 22.5 per cent in 2006 to 22.1 per cent this year, impacted by the introduction of lower margin categories such as games and computers.

JB Hi-Fi CEO, Richard Uechtritz, highlighted the company’s cost-effective retail model.

“Our lower cost of doing business has allowed us to manage this shift in product mix and support our every day low pricing philosophy whilst improving our earnings margin,” said Uechtritz.

“Whilst we believe we have the lowest cost base in the industry, we continue to focus on ways of improving even further.”

Uechritz said all product categories performed well throughout the year including games, DVD, computers and visual.

JB Hi-Fi will move into mobile consumer electronics and telecommunications throughout Australia by June 2008, as it already has in many of its 24 Victorian stores.

“Our recent move into the computer and telecommunications markets should ensure that the company has many more years of strong growth. These two new categories are the largest in terms of the markets that we operate in which should also assist in driving sales in our existing categories,” said Uechtritz.

At year end, JB Hi-Fi had 77 Australian and 12 New Zealand stores. The retailer opened 13 new stores during the FY07 and plans to open as many as 20 new stores across Australia and New Zealand during the 2008 financial year.

The retailer claims sales for the year to date have been strong and expects a 33 per cent rise in sales to around $1.7 billion for FY08.

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