JB Hi-Fi NZ ends FY20 in decline despite online sales boom
- 17 August, 2020 12:00
JB Hi-Fi has recorded solid growth in its FY20 results in its group operations, yet its New Zealand operations continue to decline.
Overall, the hardware and electrical retailer ended the financial year ending 30 June with a statutory net profit after tax (NPAT) of A$302.3 million, up 21 per cent year-on-year.
This falls in the middle of its June forecast, when it predicted a rise between 20 to 22 per cent of A$300-A$305 million.
Also roughly in line with its forecast is an increase of sales by 11.6 per cent, to A$7.9 billion.
Things were less successful for its New Zealand operations however, with total sales down 5.7 per cent, to $222.8 million, and earnings before interest, taxes, depreciation and amortisation (EBITDA) down $0.1 million, representing a decline of 105.3 per cent. This was largely attributed to temporary store closures due to government restrictions associated with measures taken to help stem the spread of COVID-19 in the country.
Of note was a rise in online sales, which increased 48.8 per cent, to A$597.5 million, for the financial year. This was driven largely by a surge in the fourth quarter, with an increase across the group of 134 per cent on the previous corresponding period.
In its New Zealand operations, the retailer saw an FY20 online sales boom of 53.3 per cent, to $20.4 million, with a Q4 surge of 145 per cent.
Despite the company's NZ arm's overall decline, the retailer claimed that the group is still focused on continuing to improve performance in its New Zealand stores, referring to its past performance and the uncertainty surrounding the pandemic.
As a result, the group reviewed the carrying value of some of its New Zealand assets and incurred a one-off $25.6 million non-cash, post tax impairment.
Richard Murray, JB Hi-Fi Group CEO, said in a statement to the Australian Securities Exchange (ASX) that the group's overall performance was “a strong result in the most challenging of times”.
“We are pleased to report strong sales and earnings for FY20 and importantly, we have provided our customers with the products they required as they spent more time working, learning and seeking entertainment at home, and kept our team members in jobs with an absolute focus on health and safety,” he said.
Meanwhile, JB Hi-Fi Australia recorded total sales growth of 12.5 per cent, to A$5.32 billion, while EBITDA was up 22.6 per cent, to A$419.5 million. Its online sales increased 56.6 per cent, to A$404.0 million, with a Q4 surge of 155.2 per cent.
There was an acceleration of momentum noted for Australia's Q4 due to surges in remote working and entertaining, with hardware and service sales in particular — which exclude music, movies and game software from all sales — increasing 15.1 per cent, with comparable sales up 14.6 per cent
Additionally, sister company The Good Guys recorded sales growth of 11.2 per cent, to A$2.39 billion, with comparable sales up 10.8 per cent. While not as large as the other two arms, there was still a boost in online sales at 33 per cent, to $174.2 million, and a Q4 surge of 91.3 per cent.
To compete with the juggling act of operating amid COVID-19, JB Hi-Fi also revealed some of the measures to ensure business continuity.
Among health measures taking place in its stores, it claimed that it didn’t receive any subsidies from the Australian government, but did receive NZ$3 million from the New Zealand government’s wage subsidy scheme to support employee’s wages while its stores in the country were closed.
Looking to FY21, the retailer remained cautiously optimistic, with total sales growth for July up 42.1 per cent, 9.1 per cent and 40.4 per cent for JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys, respectively.
It even noted that the first 11 days in August recorded “a significant acceleration” in online sales in Victoria as it entered stage 4 temporary store closures.
Even with this surge of growth however, a sales guidance for the financial year ahead was not given due to the uncertainty around the pandemic.