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JB Hi-Fi defies virus and supply issues to deliver strong full year result

Richard Murray
Richard Murray
CEO of JB Hi-Fi Group Richard Murray.

Trading through lockdown and making a strong commitment to the health and safety of its team has paid off for JB Hi-Fi Group, which on Monday revealed an 11.6 per cent increase in sales to $7.9 billion during FY20. 

The result, driven by customers decking out their home offices with new electronics and spending on TVs, audio and small appliances, led to a statutory net profit after tax increase of 21 per cent year-on-year to $302.3 million. 

In Australia sales grew 12.5 per cent, while the New Zealand business suffered the impact of mandatory store closures with a sales decrease of 5.7 per cent. 

And in an environment that has seen many of its contemporaries struggle, JB Hi-Fi has flourished, according to CEO Richard Murray. 

“This is a strong result in the most challenging of times,” Murray said.

The result was achieved through the business’ five competitive advantages – it’s scale, low cost operating model, store locations, supplier partnerships and multichannel capabilities.

The group saw strong online growth as well, with online sales up 48.8 per cent during the year to $597.5 million, with Q4 sales in particular up 134.3 per cent. 

“The Group has worked very hard to maintain our position as the number one destination for tech, consumer electronics and home appliances, and we’re focused on maintaining a resilient retail model that rewards our customers and team for their loyalty.

“We’re obviously really proud of these results and want to call out the team for what’s been a massive period over Covid-19 – they just keep giving.”

However, JB’s warehouse team have essentially been working under Boxing Day conditions for months, Murray said, and due to the extreme level of demand the business is beginning to run into supply issues.  

“The [warehouse} guys are working full-time just to get stock into the business… [but] I’m pleasantly surprised with the inventory we have on hand that we can drive the sales numbers we are,” Murray said.  

“If you had asked me 12 months ago if we could achieve double digit sales growth with this level of inventory, I wouldn’t have thought so, so it’s a great outcome.”

In New Zealand, gross profit fell to $36.8 million, compared to $40.8 million the year prior. Sales were materially impacted, but the business was able to mitigate the financial losses due to claiming $3 million in wage subsidies from the New Zealand Government. In Australia JB Hi-Fi Group did not receive JobKeeper.

Murray declined to give a sales outlook into FY21, though said the group has seen online sales accelerate in Victoria following the rollout of Stage 4 store closures.

“This, combined with continuing sales momentum across the rest of Australia, has resulted in the group achieving strong sales growth in August to date,” Murray said.

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