Despite decline in store sales, JB Hi-Fi experiences Q2 growth

Despite decline in store sales, JB Hi-Fi experiences Q2 growth

Tech-focused retail network performs well despite heavy discounting in market

JB Hi-Fi has seen its sales grow for the five months to November 30 for its branded stores in A/NZ, despite comparative store sales for JB Hi-Fi branded stores beling slightly down.

The retail network posted a growth of 7.8 per cent, or 6.5 per cent when the Clive Anthonys branded stores are include, though comparative store sales for JB Hi-Fi branded stores was found to be at -1.8 per cent.

While JB Hi-Fi CEO, Terry Smart, has seen sales in the second quarter improve overall, it was not enough to overcome the impact of the decline in sales in the first quarter, as well as a “high level of discounting” in the market by retailers, who have been pricing inventory below cost to “drive foot traffic and/or clear excess inventory.”

“Throughout this period we have maintained our low price promise to customers and, as a result, our gross margin has been impacted by 27bps for the five months to November 30 against the prior year,” he said.

The company has seen strong and continued growth in the computers, IT and accessories areas, with the newly introduced iPhone 4S in October boosting its telecommunications area after a soft first quarter.

While JB Hi-Fi announced that music and DVDs are performing “in line with expectations” and it continue to see market growth in both categories, it hopes to see another revenue stream for with its recently launched digital music streaming service, JB Hi-Fi Now.

“JB Hi-Fi Now has launched with positive reviews as we continue to innovate to capture new markets with evolving technology,” Smart said.

The retailer has posted strong online sales, up 80 per cent on the prior period, and attributes the growth to the implementation of additional services such as pick up in store, factory scoop and direct imports.

While video gaming for JB Hi-Fi is down due to continued decline in Nintendo Wii and DS sales, it has seen good sales and market share growth with the PlayStation 3 and Xbox 360 platforms.

“As a result of these factors, we expect EBIT for the half year of 2012 to be around five per cent below our first half last year, subject to the Christmas trading performance being in line with recent months’ trends,” Smart said

The retailer foresees the EBIT decline to result in the earning per share (EPS) being approximately one per cent below last year.

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