JB Hi-Fi changes tune: results mention ‘Commercial’ business, not Solutions

JB Hi-Fi has posted strong half-year results and once again remained largely silent on its intentions to address the business market.

The retail giant operates “Solutions” business that targets B2B sales and services. The company’s results and regulatory filings nearly always offer some insight into the performance of the Solutions business, but does so in very guarded language that says not much more than it grew and remains on track to hit a long-defined target of $500 million in annual sales.

In half-yearly results posted today, the company makes a small change: it has dropped the $500m sales target and now refers to the team as “The Commercial business”.

“The Commercial business recorded strong sales growth as we continue to expand our product and service offering” is all investors have been told.

CRN mentions this because when we last covered JB Hi-Fi’s results we opined that its reach and brand strength makes it ideally poised to address the IT services market. That observation prompted contact from the company, asking about our interest in covering soon-to-be-revealed developments.

Six months later and CRN maintains its view of JB Hi-Fi’s prospects, notes the name change and is still very interested to know what comes next!

For now, we can say that the company is doing just fine.

Across the group – comprising JB Hi-Fi, The Good Guys and JB Hi-Fi Solutions – sales for the half-year ended 31 December 2019 rose by 3.9 percent to from $4.0 billion. Net profit after tax hit $174.4m, up 8.9 percent, while earnings per share and dividends also climbed.

At JB Hi-Fi, online sales hit 6.3 percent of total sales, or $170.8m.

There were some notes of caution in the results announcement (pdf), which says consumers prefer to buy when goods are on sale and that the company sees growth in low-margin products.

Another interesting hint comes in the results presentation (pdf), which on page 20 says a FY20 “focus area” for The Good Guys is “National rollout of Telco services in partnership with Telstra”.

CRN has asked JB Hi-Fi to explain that point, because The Good Guys already promotes Telstra mobile plans. The language used hints at a mobile virtual network operator (MVNO) play that could see The Good Guys use Telstra’s network. If that comes to pass, it will hardly be unique: Aldi, Boost, and Woolworths all use Telstra’s network for their MVNO services. CRN has asked JB Hi-Fi to explain the Telstra reference but had not received a response at the time of writing.

Guidance for the full financial year is for group sales of ~$7.33bn, with net profit after tax of between $265m and $$270m, a six to eight percent jump from FY 18/19.