The JB Hi-Fi Limited (ASX: JBH) share price is climbing today after the retailer showcased its resilience in its full-year FY20 report. In early afternoon trade, JB Hi-Fi shares have jumped nearly 5% to $49.58.
Key points from JB Hi-Fi’s FY20 report
The number one electronics retailer in Australia delivered a slight beat to expectations, reporting underlying profit of $332.7 million, a 33% increase on 2019 as investors flocked to stores to set up home offices.
The company’s low-cost operating model means it was able to leverage 11.6% in sales growth (to $7.9 billion) into such a strong profit result even as shops were forced to close.
I’m somewhat wary that sales may have been brought forward by the likes of JobKeeper, which can actually leave many employees in stronger positions, so will be watching store traffic closely in the lead up to Christmas.
The biggest winners were hardware and services, with new laptops, desktops, iPads etc. required for the work-from-home lifestyle. However, in a sign of the future, software dropped 12.1% as movie and music sales fell. This is probably the biggest concern, as more consumers turn to streaming and digital games rather than physical DVDs or CDs.
Management reported a 48% increase in online sales to $597 million, however, this represents just 7.5% of its total, offering substantial runway. The end of the financial year saw a 134% spike as well. Due to the Stage 4 lockdown in Victoria, the company has decided not to offer sales guidance.
For a detailed write-up on JB Hi-Fi’s FY20 report, check out this article from Rask Media’s Jaz Harrison: JB Hi-Fi (ASX:JBH) shares rise on big FY20 result
This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.
