JB HI-FI EYES MORE MARKET SHARE AS PROFIT SURGES

JB HI-FI (ASX:JBH) has taken advantage of robust retail trading conditions to deliver a 7.5 per cent increase in first-half profits to $95.2 million.

The result builds on a strong interim result a year ago and comes despite the high-profile woes of electronics competitor Dick Smith Holdings (ASX:DSH).   

JB Hi-Fi CEO Richard Murray says he is keen to take advantage of any market share likely to be shed by its stricken rival as the company continues to diversify its product range, particularly into small appliances.

JB Hi-Fi delivered the latest profit for the six months to the end of December on the back of a 76.7 per cent lift in sales to $2.12 billion.

The sales surge was aided by seven new store openings, although like-for-like sales still managed to increase 5.2 per cent. Two new stores in New Zealand helped sales growth there hit 12.7 per cent during the period.

JB Hi-Fi reported strong sales in November and December, reflecting recent retail figures from the Australian Bureau of Statistics showing a 4 per cent gain in retail sales across the board, led by the popularity of household goods.

The only negative for JB Hi-Fi was software, sales of which fell 4.6 per cent, although the big plus came from the e-commerce division. Online sales surged 28.9 per cent to account for about 3 per cent of total JB Hi-Fi sales. This is up from 2.5 per cent a year earlier.

The half year was dominated by store openings and the conversion of nine JB Hi-Fi stores into JB Hi-Fi Home stores. Small appliances were introduced into 22 existing JB Hi-Fi stores.

"Appliances are a natural adjacency to our successful consumer electronics categories and accessing the $4.6 billion appliance market, via both the introduction of small appliances is a significant growth opportunity for the company," Murray says.

The new store rollout and store conversions will continue in the current half year, with plans to boost the number of JB Hi-Fi Home stores to 75 by FY17 from the 56 at the end of the end of December last year.

JB Hi-Fi notes that the impact from the receivership of Dick Smith Holdings is yet to play out, offering a level of uncertainty for the year ahead.

However, Murray indicates that JB is looking at any opportunities this will offer the group in terms of growing market share.

Some analysts predict a windfall of more than $100 million in annual sales could flow to JB Hi-Fi if Dick Smith was to close all stores.

However, receivers have reiterated that they have fielded inquiries from scores of interested parties to buy the business, although it is likely any trade sale will result in the closure of some stores.

Murray says the second half has started on a strong note with January sales driven by back-to-school technology purchases.

JB Hi-Fi is forecasting sales of $3.9 billion in FY16, while net profit is expected to range from $143 million to $147 million.

However, Murray has warned of tougher conditions in the second half after sales at the tail end of FY15 were boosted by business tax incentives.

"We continue with a strong investment program, including rolling out JB Hi-Fi Home, the introduction of small appliances to existing stores and upgrades to a number of our stores," says Murray. "This will position us well as we cycle a strong second half in the prior year."

JB Hi-Fi has lifted the interim dividend by 4c per share to 63c per share.