JB Hi-Fi (JBH)

By Jason Fittler

JBH reported their half-year result this week; the price jumped 17% after the announcement.

Keep in mind that JBH is a key company when looking at retail sales.

Retail sales is a good indicator as to how the economy is travelling as an increase in retail sales would indicate that the consumers are feeling more financially secure.

JBH reported a 3.1% increase in sales, gross margins up slightly, Net Profit After tax up 3% and earnings per share up 2.9% they also increase their dividend up 1 cents it is now 50 cents.

Given the increase in the share price, it was clearly considered positive news by the market.

Their online sales were up 40% but off a low base. Online sales are around 2% of total sales for JBH.

The JB Hi-Fi home trial has shown good growth with no impact on the traditional JBH stores.

The JB Hi-Fi home stores are focused on home appliances and white goods. They are currently working on rolling out two more of the Home stores in Queensland bring the total to six stores. They have continued to roll out new stores with 163 now in Australia and 13 in New Zealand.

Although this is a good result we need to put in context.

The net profit is still down on the 2011 result, so too are net assets mainly due to the increase in borrowing in 2012.

Net cash flow from operations is down for the past 2-years and so too is free cash flow and cash position at the end of the period.

Overall JBH is one to watch and I continue to hold the company.

For more information on JB Hi-Fi (JBH) please contact us on 07 4771 4577.