Consumer electronics chain JB Hi-Fi says it expects solid earnings growth and sales for the year ahead even though the challenging market for retailers led to its first fall in profit in more than 10 years.
JB Hi-Fi on Monday reported a 7.55 per cent fall in net profit to $109.7 million for the year to June 30 compared with the previous corresponding 12 months.
The result was dragged down by price deflation on its consumer goods range that includes televisions, audio equipment, computers and electronic games, which more than offset stronger sales volumes.
The company reported that sales revenue in July “remained challenging” but expected 2011/12 to be another solid year of sales and earnings growth.
Revenue rose 8.35 per cent to $2.96 billion for the year to June 30 but was down negative 3.3 per cent in the month of July.
It forecast sales this financial year to be “circa $3.2 billion, an eight per cent increase on the prior year”, based on conditions remaining similar to 2011.
This compares to a market consensus of more than $3.3 billion.
“While we anticipate the market will remain challenging, we will continue to focus on driving market share growth through our core strengths of everyday low prices, great people and our low cost of doing business,” JB Hi-Fi chief executive Terry Smart said in a statement.
Analysts said the full year result, which was broadly in line with market expectations, was “pretty good” despite being the first full year profit decline in more than a decade.
JB Hi-Fi shares opened four percent lower before recovering during a volatile day of trading.
Its share price was down 23 cents at $14.08 by 1454 AEST but had been in positive territory earlier in the afternoon.
UBS analyst Ben Gilbert said the company’s outlook was not much weaker than consensus.
“Really, the result has been actually pretty good against the backdrop of deteriorating consumer sentiment, heavy promotional activity and deflationary pressures,” he said.
Mr Gilbert said the company was experiencing deflation across a large proportion of its categories, but was also reporting “pretty strong” volume growth.
“Generally speaking prices were down due to deflation overall but it was offset by stronger volumes,” Mr Gilbert said.
“When combined with the opening of 16 stores, the maturing of recently opened stores and our continued online focus, we are well positioned to maximise growth through the next 12 months.”
The company said it had opened 18 new JB Hi-Fi stores across Australia and New Zealand in 2010/11, with a further four Clive Anthonys’ stores converted to JB Hi-Fi stores.
In conjunction with 42 stores opened over the previous two financial years, the new stores would help continue to drive revenue and earnings growth.
A further 16 new stores are expected to be opened in 2011/12.
The company declared a fully franked final dividend of 29 cents per share.
