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Challenging first quarter sales impacts JB Hi-Fi

Challenging first quarter sales impacts JB Hi-Fi

Net profit dips 1.95 per cent to $88.5 million

ASX-listed retailer, JB Hi-Fi (ASX:JBH) has revealed its net profit dipped 1.9 per cent to $88.5 million for the first half of FY15 ending December 31, compared to $90.3 million at the same time last year.

Despite this, total consolidated sales grew 1.3 per cent to $1.97 billion from $1.94 billion in the first half of FY14.

Earnings before tax was also down to $130 million compared to $132.9 million in H1 FY14.

In Australia, total sales grew 1.4 per cent to $1.86 billion, but comparable sales were down 0.6 per cent mainly due to the market wide decline in tablet sales during the first quarter.

Specifically, hardware and services sales in the first half of FY15 were up 4.7 per cent driven by the telco, fitness, games hardware and appliances categories.

Its New Zealand business experienced total sales decline of 4.3 per cent to $NZ113 million, and comparable sales were down 6.4 per cent, particularly due to cycling digital switchover in the previous corresponding period.

“This was a pleasing result for the half year given the combined headwinds of a challenging first quarter sales result and the cycling of both digital switchover in visual and the launch of new gaming consoles in the second quarter last financial year,” JB Hi-Fi CEO, Richard Murray, said. “We executed the key Christmas trading period well, maintaining our price leadership and keeping costs well controlled while investing for future growth in Home, commercial and online.”

The retailer’s online sales grew 13.5 per cent, representing about 2.5 per cent of total sales. It launched a new website in July last year, improving product search functionality, providing more valuable product information and responsive design. It clocked up about 1.2 million unique visitors per week during the first half of FY15.

The retailer has 185 stores across Australia and New Zealand. This financial year, it plans to open six new stores including one JB Hi-Fi store and five JB Hi-Fi Home stores, keeping in mind its target of 214 stores across A/NZ.

Read more: ChannelAdvisor opens new Sydney office

In a statement to ASX, the retailer said JB Hi-Fi Home represented a significant growth opportunity. The home appliances market is circa $4.6 billion, larger than many of the categories JB currently operates in.

“As our suppliers direct their investment towards enabling the connected home, JB is positioning its model to be the consumer’s destination for this technology evolution,” Murray said. “We continue to believe that our expansion into appliances is a critical enabler to our success in the connected home.”

January sales and operational earnings for the retailer are ahead of the same period last year , Murray said.

“This gives us confidence on our momentum for the second half,” he said.

Read more: NVIDIA sees record third quarter profits

JB is expecting total sales to be about $3.6 billion and net profit to range between $127 million to $131 million in FY15.

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