JB Hi-Fi Limited (JBH)
HOLD

Sales ritardando

 13 Feb 2023
Sector: Consumer Discretionary

1H23 RESULT

Need To Know

  • January sales weak, comparable sales at JBH +1.5%, TGG 0.0% 
  • Bumper interim dividend at 197cps, 17cps ahead of market, payment date 10 March
  • Inventory under control

Confirmation today that sales momentum is slipping, and we expect not only consensus earnings downgrades for FY23f but also potentially negative comparable sales growth figures emerging.

Interim result pre-released in January. JBH’s earnings were announced in January with group revenue reaching $5.3bn and EBIT of $479.2m +14% compared to last year. The interim dividend of 197cps fully franked was a strong outcome at 65% of net profit.

Inventory management has been a key concern in the retail industry, but JBH is well on top of its working capital situation. Group gross margin increased to 22.8% although the cost of doing business margin inched higher to 11.5%.

JBH continues to see robust sales growth in communications, audio, accessories and computers and fitness. In other words, just about everything in store other than its legacy movies, music and games software collectively now less than 5% of sales).

January trading update. JBH said comparable store sales growth at JBH Australia in January was +1.5% while at The Good Guys it was 0.0%. CEO Terry Smart said: “we have seen sales growth start to moderate from the elevated levels seen in the first half of FY23”.

Investment View

The CEO has belled the cat and confirmed our expectation of slowing sales growth this year. As usual, JBH is in tip top shape to manage its way through a slower sales period with inventory under control and its legendary cost management well tied down. But we anticipate downward earnings revisions from the market to accommodate the slowing sales trend after what has been a fervent period through the pandemic. 

Figure 1: 1H23 Result

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Stock Overview

Share Price

Company Overview

JB Hi-Fi is a consumer electronics and whiteware retailer with a 319-store network across Australia and New Zealand.

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