By Patrick Avenell
MELBOURNE, VIC: Low prices and the Federal Government’s stimulus package have been identified as the two key drivers of JB Hi-Fi’s success over the last 12 months. At the company’s annual general meeting today, chairman Patrick Elliott said the JB was well placed to keep the profits rolling in.
In his speech, Elliott outlined how JB Hi-Fi had experienced an incredible financial year to 30 June 2009. Whereas the global financial crisis had deeply affected some retailers, JB’s business model was well-suited to leaner times, resulting in some impressing figures. Revenue was up 27 per cent to $2.3 billion; net profit was up 45 per cent to $94.4 million; and earnings per share was up 43 per cent to 88.3 cents.
Elliott said that the group’s ability to offer low prices, which is underwritten by the company’s low overheads proposition, was a key factor in these results.
“Our low price position has certainly been a key driver of our market share growth during weaker macroeconomic periods,” Elliott said. “The drift to thrift has been seen in a number of retail categories including consumer electronics – increasingly, consumers have been emphasising price in their purchasing decisions.”
Elliott said that because JB was able to offer lower prices, it had attracted consumers who had previously been prepared to pay a premium to shop at a more salubrious retailer. He believes that having snared them during the lean times, the group will retain their business.
“The company has won consumers that may not have previously shopped in our stores and now the opportunity is to keep those customers as economic conditions improve.”
Aside from low prices, Elliott identified the stimulus package as an effective catalyst for sales.
“There is no question that the stimulus payments supported retail trade over the last nine months. At JB Hi-Fi, we did not experience a surge in demand correlated with the timing of the payments, although we may have avoided dips that otherwise we may have suffered.”