Lower TV sales temper JB Hi-Fi profit

CLAIRE ROGERS
Last updated 13:01 11/02/2013

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Consumer electronics retailer JB Hi-Fi made a A$82 million (NZ$101m) profit for the half-year ended December, but same-store sales declined due to a slowdown in television sales.

In New Zealand sales fell 6 per cent to NZ$117.5m, while gross profit declined 3.4 per cent to NZ$20.1m. Same-store sales in New Zealand slipped 5.6 per cent.

The retailer said the result for New Zealand was affected by the Rugby World Cup, which had delivered a boost to sales in the first half of the previous financial year.

It expected pricing to remain aggressive in consumer electronics in New Zealand throughout the second half of the year.

The 3 per cent increase in net profit year-on-year for the group followed a similar-sized increase in total sales to A$1.8 billion.

Sales at JB Hi-Fi branded stores in New Zealand and Australia rose 3.1 per cent but same-store sales fell off by 3.5 per cent.

Chief executive Terry Smart said the TV category was largely behind the decline.

"The industry has seen TV sales decline over the past few years as the category moves towards a more typical replacement-driven sales market," he said.

But the ASX-listed company was pleased with the overall results, with total sales growing and an improved gross margin resulting in net profit growth.

Gross margin increased to 21.5 per cent for the half, up from 21.2 per cent year-on-year. Earnings before interest and tax (ebit) rose 2.5 per cent to A$123.7m.

In New Zealand gross margin increased to 17.1 per cent, from 16.7 per cent, while ebit rose 18 per cent to $2.6m.

Smart said the retailer had started the 2013 calendar year positively, with year-on-year sales growth of 11.7 per cent in January, and same-store growth of 4.2 per cent.

The company predicts full-year sales will reach A$3.25b and net profit to land between A$108m and A$112m.

That is based on a fall in same-store sales of about 3 per cent in the year and gross margin to remain unchanged at 21.5 per cent.

"In the second half the 2012 financial year, we saw aggressive discounting across the market, which while driving sales, did impact gross margin," Smart said.

"As we cycle this period we anticipate sales growth may be more challenging, but this should be offset by a relatively stable gross margin environment."

JB Hi-Fi has 13 stores in New Zealand, and 163 in Australia.

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- BusinessDay.co.nz

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