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JB Hi-Fi (JBH) is a chain of electrical stores, selling leading brands of hi-fi, speakers, televisions, DVDs, cameras, car sound, home theatre, computers, white goods, portable audio and a variety of music, games and movies.
The company has been able to grow its sales over the last 5 years in what can only be described as one of the most difficult trading conditions for retailers in over 20 years.
JBH’s strategies for growth are simple: increase the number of stores, increase sales, and through that, increase profit. JBH’s expansion is not only in the Australian market, but also in New Zealand. Since entering the New Zealand market in early 2007, it has opened 13 stores.
Margin growth and consumer optimism
JBH’s 1H13 results impressed on several fronts, with sales revenue reaching $1.3 billion, 3.1% higher than the 1H12 result. Its net profit climbed to $82.1 million, a 3% improvement compared to the prior corresponding half.
JBH’s most surprising result was its gross margin, which increased by 28 basis points. This was a very impressive result considering that the gross margin of its competitor, Harvey Norman, fell by 260 basis points over the same period.
We think that the operating environment for retailers is looking more optimistic, with the Westpac Consumer Sentiment Index returning to a reading of over 100 in the last survey.
In its latest reading, the consumer sentiment index settled at 102.2 in June, 4.7% higher compared to the prior month’s reading.
Sales and profit upgrade
Last month JBH announced an update to its previous sales and net profit after tax (NPAT) guidance for FY13.
The company now expects sales in FY13 to be around $3.3 billion and NPAT to be within the range of $112.0 million to $116.0 million, a 7% to 11% increase in NPAT on the prior year.
The previous FY13 guidance was for sales circa $3.25 billion and NPAT within the range of $108.0 million to $112.0 million.
JBH said the upgrade has been driven by stronger than expected sales in the second half of FY13.
Specifically the company said sales growth in Australian and New Zealand for the four months ended 30 April 2013 was 10.3% and comparable store sales growth was 3.0%.
Outlook
While the opening of 13 new stores in FY13 drove much of JBH’s impressive sales growth, comparable sales growth was still solid.
JBH’s 3% comparable stores sales growth is running at a much higher level than fellow retailers David Jones who saw a 3.4% decline in comparable stores sales in the recent quarter and Myer who only saw a 0.4% rise.
The other factor we see helping JBH is the lower Australian dollar. We think this over the long-term will see consumers turn back to retail stores as the online market becomes relatively more expensive.
Overall, we see continued strength for JBH’s share price to be driven by strong sales growth and solid margins
JB Hi-Fi (JBH) is a chain of electrical stores, selling leading brands of hi-fi, speakers, televisions, DVDs, cameras, car sound, home theatre, computers, white goods, portable audio and a variety of music, games and movies.
The company has been able to grow its sales over the last 5 years in what can only be described as one of the most difficult trading conditions for retailers in over 20 years.
JBH’s strategies for growth are simple: increase the number of stores, increase sales, and through that, increase profit. JBH’s expansion is not only in the Australian market, but also in New Zealand. Since entering the New Zealand market in early 2007, it has opened 13 stores.
Margin growth and consumer optimism
JBH’s 1H13 results impressed on several fronts, with sales revenue reaching $1.3 billion, 3.1% higher than the 1H12 result. Its net profit climbed to $82.1 million, a 3% improvement compared to the prior corresponding half.
JBH’s most surprising result was its gross margin, which increased by 28 basis points. This was a very impressive result considering that the gross margin of its competitor, Harvey Norman, fell by 260 basis points over the same period.
We think that the operating environment for retailers is looking more optimistic, with the Westpac Consumer Sentiment Index returning to a reading of over 100 in the last survey.
In its latest reading, the consumer sentiment index settled at 102.2 in June, 4.7% higher compared to the prior month’s reading.
Sales and profit upgrade
Last month JBH announced an update to its previous sales and net profit after tax (NPAT) guidance for FY13.
The company now expects sales in FY13 to be around $3.3 billion and NPAT to be within the range of $112.0 million to $116.0 million, a 7% to 11% increase in NPAT on the prior year.
The previous FY13 guidance was for sales circa $3.25 billion and NPAT within the range of $108.0 million to $112.0 million.
JBH said the upgrade has been driven by stronger than expected sales in the second half of FY13.
Specifically the company said sales growth in Australian and New Zealand for the four months ended 30 April 2013 was 10.3% and comparable store sales growth was 3.0%.
Outlook
While the opening of 13 new stores in FY13 drove much of JBH’s impressive sales growth, comparable sales growth was still solid.
JBH’s 3% comparable stores sales growth is running at a much higher level than fellow retailers David Jones who saw a 3.4% decline in comparable stores sales in the recent quarter and Myer who only saw a 0.4% rise.
The other factor we see helping JBH is the lower Australian dollar. We think this over the long-term will see consumers turn back to retail stores as the online market becomes relatively more expensive.
Overall, we see continued strength for JBH’s share price to be driven by strong sales growth and solid margins
Ruby's P.O.V
their i was on the X-Factor stage. i heard them say a name. but it wasnt mine not my name they said in pure excitment. my heart dropped in sadness. i walked off wiping the fresh tears coming down my face. "hey Rub's you alright" asked my older brother harry. "no hazz im not i didnt make it okay go ahead laugh" i say running in the car. he came for me he pulled me in for a hug. "no worries love you will be found" says harry kissing my head. we arrived home seeing nialll smashing on some chips. he ran to me asking if i made it. i frowned and he hugged me. and handed me a chip. i smiled and grabbed the bag. "MINE NOW" i say laughing heading upstairs. niall was following behind me laughing also.
their i was on the X-Factor stage. i heard them say a name. but it wasnt mine not my name they said in pure excitment. my heart dropped in sadness. i walked off wiping the fresh tears coming down my face. "hey Rub's you alright" asked my older brother harry. "no hazz im not i didnt make it okay go ahead laugh" i say running in the car. he came for me he pulled me in for a hug. "no worries love you will be found" says harry kissing my head. we arrived home seeing nialll smashing on some chips. he ran to me asking if i made it. i frowned and he hugged me. and handed me a chip. i smiled and grabbed the bag. "MINE NOW" i say laughing heading upstairs. niall was following behind me laughing also.
Madision's P.O.V
when i got done singing somebody knocked on the door. i checked and saw miley and the boys. "WELCOME TO ONE DIRECTION" says the boys at the same time. "are you seriouse oh my god thank you sooo much"i say with tears flooding my eyes. "yup we heard you singing and miley is joining to so guys could talk girly stuff"says niall. i smile and hug all of the mand miley to i give niall a passinot ekis on the cheek. "what i want my first kiss to be special" i say blushing.
_______________Later______________________
I was with the boys and miley on the tour bus my feet were shaking like crazy. we walked on stage and we started off. it was my turn alll the lights the fans on me. "i was thinking about her thinking about me thinking bout us thinking bout what we gonna be open my eyes it was only just a dre-ee-m" i smile and the fans go crazy. i smile and jump up and down.
when i got done singing somebody knocked on the door. i checked and saw miley and the boys. "WELCOME TO ONE DIRECTION" says the boys at the same time. "are you seriouse oh my god thank you sooo much"i say with tears flooding my eyes. "yup we heard you singing and miley is joining to so guys could talk girly stuff"says niall. i smile and hug all of the mand miley to i give niall a passinot ekis on the cheek. "what i want my first kiss to be special" i say blushing.
_______________Later______________________
I was with the boys and miley on the tour bus my feet were shaking like crazy. we walked on stage and we started off. it was my turn alll the lights the fans on me. "i was thinking about her thinking about me thinking bout us thinking bout what we gonna be open my eyes it was only just a dre-ee-m" i smile and the fans go crazy. i smile and jump up and down.
Ally's P.O.V
their was something fishy going on he sounded just like him. but i shook it off i got up and went inside. i checked my Twitter and saw somebody followed me i check and see @Harry_Styles I smile and follow back. when somebody knocks on the door i check and see Harry "hey whats up" i say smiling. "nothing i just wondered if you wanted to take a walk?" i nod and head out. "so tell me about youreself" says Harry looking at me with those beaming green eyes. i told him every-thing he looked straight at my eyes when i was talking. i liked that cause i knew he was listening.
Harry's P.O.V
"so tell me about youreself" she says with that smile that i adored. i told her everything execpt that i was in One Direction. i sang her a few songs. so did she she had the most beutiful voice. i was already 9:30 at night we both head home tonight was the best night.
authors note: sorry if it was boring
their was something fishy going on he sounded just like him. but i shook it off i got up and went inside. i checked my Twitter and saw somebody followed me i check and see @Harry_Styles I smile and follow back. when somebody knocks on the door i check and see Harry "hey whats up" i say smiling. "nothing i just wondered if you wanted to take a walk?" i nod and head out. "so tell me about youreself" says Harry looking at me with those beaming green eyes. i told him every-thing he looked straight at my eyes when i was talking. i liked that cause i knew he was listening.
Harry's P.O.V
"so tell me about youreself" she says with that smile that i adored. i told her everything execpt that i was in One Direction. i sang her a few songs. so did she she had the most beutiful voice. i was already 9:30 at night we both head home tonight was the best night.
authors note: sorry if it was boring