JB Hi-Fi flying high on solid FY19

Stock

J B HiFi (JBH) $30.28 as at 12/08/2019

Event

JB Hi-Fi crashed through to a new 52-week high early in the session today, rallying on a better than expected result at the full year announced this morning. The consumer goods group saw profit rise 7% despite the tough retailing conditions, surpassing market expectations.

The result was driven by The Good Guys improving profit margin which rebounded from a steep decline in FY18. In fact The Good Guys accounted for more than half of the 7% rise in profits for the full year. The Australian JB division held firm with a small 3% rise in EBIT with the online push helping support sales growth. JB NZ performed well, reducing the EBIT loss by more than 30% however this remains a small contributor to the group’s numbers.

JBH has a reasonably strong balance sheet so the profit beat also drove a dividend beat which shareholders have welcomed. The outlook was a little mixed here. The company gave a July 2019 sales update which showed a steady rate of growth compared to July of 2018, albeit off a low base there, FY20 guidance was given to “circa $7.25 billion,” which was marginally below consensus at $7.295b however if JB  can continue to keep costs under control it may mean another beat at the profit line.

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Market Matters Take/Outlook

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