The JB Hi-Fi Limited (ASX: JBH) share price is up more than 4% after the electronics retailer announced its FY20 result.
JB Hi-Fi’s incredible FY20
JB Hi-Fi revealed that in FY20 its total sales increased by 11.6% to $7.9 billion.
JB Hi-Fi Australia sales grew by 12.5% to $5.32 billion. Communications, computers, visual, audio and small appliances were the categories that saw elevated growth. Online sales increased by 56.6% to $404 million. Its profit margins improved during the period.
JB Hi-Fi New Zealand sales fell 5.7% to NZ$222.8 million due to store closures because of COVID-19 restrictions. The Good Guys sales grew by 11.2% to $2.39 billion.
‘Underlying’ EBIT (click here to learn what EBIT means) increased by 30.5% to $486.5 million and underlying net profit after tax (NPAT) rose by 33.2% to $332.7 million. Statutory/reported NPAT increased by 21% to $302.3 million.
You may be wondering what the difference between underlying and reported earnings is. The statutory figure includes the new AASB 16 Leases accounting standard and also includes a $24 million write-off of certain JB Hi-Fi New Zealand assets.
JB Hi-Fi dividend
JB Hi-Fi’s Board decided to declare a final dividend of 90 cents per share, up 76.5%. That brought the final dividend to $1.89, up 33.1%. The FY20 payout only represented 65% of underlying net profit.
Outlook
In July 2020 that company saw 42.1% sales growth for JB Hi-Fi Australia with comparable sales growth of 44.2%. JB Hi-Fi New Zealand grew sales by 9.1% last month with comparable growth of 9.1%. The Good Guys grew sales by 40.4% in July 2020, with comparable growth of 40.4%.
However, in Melbourne 46 JB Hi-Fi stores and 21 The Good Guys stores were shut from 6 August for at least six weeks. In Auckland, 7 JB Hi-Fi stores were shut from 12 August for at least two weeks. However, online sales, contactless click and collect, and home delivery are still operational. Consequently, online sales have accelerated in Victoria.
Management are pleased with early FY21 trading but didn’t want to give guidance.
Summary
This seems like a great result by JB Hi-Fi. But how long will this growth last? Clearly it’s not normal for JB Hi-Fi to grow profit by about a third during a recession. Will profit fall (substantially) back once jobkeeper ends?
I’d be very pleased if I were a JB Hi-Fi shareholder. But I don’t know what the right JB Hi-Fi share price to try to buy at would be. However, JB Hi-Fi continually impressed me over the past few years, so perhaps today’s price is a fair price. But there are other ASX dividend shares and ASX growth shares I’d invest in first such as Pushpay Holdings Ltd (ASX: PPH).
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