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JB Hi-Fi posts strong Q3, but outlook remains uncertain

Richard Murray

Australians working from home during the coronavirus pandemic have helped deliver a bumper quarter to JB Hi-Fi and The Good Guys, which saw sales grow faster in Q3 than the 2020 fiscal year to date.

In an update posted to the ASX on Wednesday, JB Hi-Fi said it saw an acceleration in sales in late March, as customers prepared for a potential increase in government restrictions by purchasing appliances and technology products needed to work, learn and entertain themselves at home.

JB Hi-Fi’s sales rose 11.6 per cent in the quarter ended March 31 in Australia, and comparable sales rose 11.3 per cent. The Good Guys’s sales and comparable sales both rose 13.9 per cent in the quarter.

JB Hi-Fi’s sales were up 6.9 per cent year on year for the period from July 1, 2019 to March 31, 2020, comparable sales were up 6.4 per cent. The Good Guys’ sales were up 5.4 per cent year on year for that same period, and comparable sales were up 4.9 per cent.

Sales have continued to grow into April and early May, according to the company, which has continued to trade both online and in-store during the shutdown in Australia.

Significant online sales growth in the quarter contributed to the strong results, and the company said it was pleased that the online businesses were able to maintain a high level of customer service and on-time delivery during a period of significantly increased volume.

Ongoing changes in consumer shopping behaviour have made it difficult to predict sales and earnings for Q4, when the retailer holds its all-important EOFY event, however, and the company said it was sticking by its decision in late March to withdraw full-year guidance.

The company noted that while it doesn’t currently anticipate needing access to funds, it has received credit approval for an additional $260 million of committed short-term debt facilities on favourable terms.

“While the outlook for the remainder of the financial year is uncertain, we continue to be in a strong financial and operational position,” Richard Murray, JB Hi-Fi Group CEO, said.

Murray thanked JB Hi-Fi’s over 12,000 team members and said they have “responded and adapted in an amazing manner to make sure we can [trade] safely and effectively.”

All of The Good Guys stores and almost all of JB Hi-Fi’s stores – except for three airport stores and seven stores in CBD locations – have remained open during the pandemic, albeit with additional safety measures in place.

They include: intensive cleaning of all stores, offices and DCs; customer capacity limits; social distancing in high-traffic areas; contactless payments; protective screens at store counters and in DCs; hand sanitiser stations at store entrances; and more.

JB Hi-Fi stores, e-commerce site and commercial operations in New Zealand were closed on March 26, when the country entered Alert Level 4. The e-commerce site and commercial business started providing ‘essential’ products via contactless delivery on April 2 in line with government regulations, and have now resumed trading across all products with a variety of fulfilment options under Alert Level 3.

The 14 JB Hi-Fi stores in New Zealand remain closed to customers but are operating to fulfil online and commercial sales.

The NZ business does not make a material financial contribution to the group, with FY19 sales of NZ$236 million, representing approximately 3 per cent of group total annual sales, and an FY19 EBIT loss of $1.9 million.

The NZ business’s total sales and comparable sales both fell 3.3 per cent in Q3. They were 0.4 per cent down year year for the period of July 1, 2019 to March 31, 2020.

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