Drones boost JB result

Record sales, Good Guys buy, lift revenue

JB Hi-Fi has posted record sales, helped by shoppers splashing out on big-screen televisions and $2000 drones and an earnings boost from its recently acquired The Good Guys business.

The home entertainment retailer’s crucial comparable sales rose 8.6 per cent in the 2017 financial year, during a time of weak consumer sentiment due to slow wages growth. Chief executive Richard Murray said JB Hi-Fi was in a good position because technology is a front-of-mind purchase for Australians.

“Technology is playing a more important role for adults and children and it is less of a discretionary purchase than before,” Mr Murray said. “Sales across the board have been really pleasing.”

He said strong sales growth of big-screen televisions, drones, smart phones and small appliances – categories which collapsed rival Dick Smith had a low market share – demonstrated the strength of the business.

“A couple years ago people paid a couple hundred dollars for a drone where now they are spending $500 to $2000 on a drone,” he said. “It has moved away from being just a toy to more of an enthusiasts to semiprofessional item.”

JB Hi-Fi’s profit for the 12 months to June 30 rose 13.3 per cent, while underlying profit, which stripped out $22.4 million in costs related to the November, 2016 acquisition of whitegoods retailer The Good Guys and a $15.8 million impairment on the New Zealand JB Hi-Fi stores, was up 36.5 per cent. Hardware and services were the strongest categories while the sales decline in CDs, DVDs and games continued.

Revenue jumped 42.3 per cent to a record $5.63 billion, following The Good Guys acquisition and the January 2016 collapse of the Dick Smith electronics chain. Shares in JB Hi-Fi, which have come under pressure since Amazon confirmed earlier this year that it is coming Down Under, closed 96¢, or 3.8 per cent, weaker at $24.41.

Investment bank Citi’s analysts said market expectations “ran ahead of” forecasts and JB’s results for its NZ stores and The Good Guys had missed expectations.

Online sales grew 38.4 per cent and now represents 3.8 per cent of total sales.