Trans-Tasman retailer JB Hi-Fi hopes to make its loss-making local business profitable by 2012.
The company’s consolidated sales across Australia and New Zealand were up 17.4 percent year on year for the financial year ended June 2010, to A$2.73 billion, with net profit rising 26 percent to A$118.7 million.
Comparative store sales for the group grew 4.8 percent and consolidated gross margin grew slightly year over year to 21.8 percent. However, the company said at its recent annual general meeting in Australia that it was disappointed with the earnings result in New Zealand.
While he did not give earnings figures for New Zealand, CEO Terry Smart told Reseller News the retailer was seeing good comparative store sales here.
The performance was affected by the closure in January of the remaining Hill and Stewart stores here. These were owned by JB Hi-Fi.
“We’re still disappointed with our performance in New Zealand, however we are continuing to open stores and we are gaining scale and getting traction. We are seeing good comparative store sales in New Zealand and that has given us heart that we can start to make some money,” says Smart.
“We are still performing poorly at an earnings level and losing money, but we are gaining that scale.” Smart expects JB Hi-Fi will continue to run at a loss for the 2011 financial year, which ends next June, but aims to produce a positive result by the following June.
“It is just a case of gaining the scale that we need. We are a low-cost operator and we have an ability to absorb some of that aggressive discounting that we are seeing.”
He adds JB Hi-Fi is pleased with the local brand awareness it has built since 2007.
“New Zealanders have taken to the model, which can be seen in the comparative store growth and we are getting that in a flat market, which means we can assume we are taking some market share.”
The retailer has recently opened two new stores here – in Dunedin and in Tauranga – and in the coming weeks will open one in the Sylvia Park mall in south Auckland. The company also opened a store in Palmerston North in the 2010 financial year. In its first year of operation in New Zealand, JB Hi-Fi opened 12 stores, with a further 12 opened in 2008 and 14 in 2009.