JB Hi-Fi shrugs off tablet decline with $128.4m profit

JB Hi-Fi's net profit after tax jumped 10.3 percent in the 2014 financial year to $128.4 million, the company revealed today in its earnings report.

Today's results reveal solid sales for JB despite a decline in the tablet market, with growth expected to continue as the retailer pushes into whitegoods under its Home brand.

JB Hi-Fi's sales growth continues, showing a 5.3 percent increase to $3.48 billion in the 2014 financial year. The increase in comparable sales was smaller though, up by a more modest 2 percent.

Total sales have been increasing for at least five years in a row, while net profit after tax has experienced ups and downs.

Despite the solid result, fourth quarter results were impacted by a decline in tablet sales and weaker consumer sentiment since May.

The downturn in the tablet sector is expected to continue in to the new financial year, said JB Hi-Fi CEO Richard Murray.

"We anticipate sales in the first half of FY15 will continue to be impacted by reduced tablet sales, however we are positive about the pipeline of new products to be released and as a result we expect solid sales growth for the year," Murray said in a statement.

A significant portion of today's announcement highlighted JB Hi-Fi's push into consumer whitegoods via its Home stores.

The retailer expects to more than double the number of Home stores in Australia in the 2015 financial year, from 22 stores to 52. By the end of the 2016 financial year the company sees "potential" for 75 Home stores.

JB Hi-Fi is leveraging its existing store network to execute this expansion. A total of 13 existing JB Hi-Fi stores were converted to Home stores in 2013. It expects to convert 26 more in the current financial year.

Meanwhile the number of JB Hi-Fi stores in Australia actually fell to 147 as stores were converted to the Home brand, despite seven new JB Hi-Fi stores opening during the year.

The overall target is 214 stores across Australia and New Zealand, including four new JB H-Fi stores and four new Home stores in Australia in the coming year.

Incremental sales per Home store are expected to be $3 million in the first year after conversion, increasing to $5 million in the second year.

JB Hi-Fi flagged its intention to "expand appliances in the JB Hi-Fi model" as connected home and appliances become more of a "fashion statement".

While sales growth across the board is expected to continue, not all categories have been recording gains. Hardware grew by 8.6 percent but software was down 8.8 percent.

While online sales grew, they are still a small proportion of overall revenue, accounting for just 2.2 percent of all sales.

As well as the rollout of new Home and JB Hi-Fi stores and a new website launched in July, the other major sales driver for the coming year cited today is the company's commercial division, including its education business.

The commercial unit is "on track" to achieve a "longer term aspirational" sales target of $500 million per annum. This growth could come in part from acquisitions, according to today's investor presentation.

JB Hi Fi recently changed the name of its education division from Network Neighborhood to JB Hi-Fi Education Solutions. At the time the company revealed to CRN plans for a BYOD notebook portal for parents under the brand.