JB Hi-Fi smashes records with remarkable profit announcement

By Patrick Avenell

MELBOURNE, VIC & SYDNEY, NSW: JB Hi-Fi has this morning reported a remarkable 45 per cent increase in profit and a 27 per cent increase in sales. This result, which is contra to news of a significant downturn in consumer sentiment, was over a 12-month period described by the CEO as one of the difficult years for discretionary spending.

Total sales for the group’s 123 stores was $2.327 billion, up almost $500 million on FY2008. Net profit was a record $94.4 million, up more than $29 million from the previous 12 months. In its report to the Australian Securities Exchange (ASX), JB Hi-Fi highlighted games, computers, DVDs, telecommunications and visual (TVs) as particularly strong performers over the year.

“Once again this is a very pleasing result during what is considered a sustained, generally weak retail climate,” said CEO Richard Uechtritz. “Again it highlights the strength and resilience of the JB retail model during an uncertain retail environment.”

Gross margin for the 12 months to 30 June 2009 is reported as 21.6 per cent, down from 21.9 per cent in FY2008. This is significant because throughout the 2009 financial year, Harvey Norman Limited regularly reported to the ASX that margins were under pressure. The resolve of JB Hi-Fi’s margin is repeatedly attributed to its unique business model, which is a combination of aggressive price points, low over heads and high impact marketing.

“JB continues to focus on keeping costs down and reducing prices [for] our customers,” wrote the Group to the ASX. “Our continued store rollout and the maturing of recently opened stores [enable] us to expand our offering, take advantage of increased economies of scale and improve our market share.”

JB Hi-Fi currently has 109 stores in Australia and 14 in New Zealand. The overall short-to-medium target is 210 stores, of which around 50 will be smaller-format. Eighteen stores are expected to be opened in FY2010.

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