Despite facing intermittent lockdown across Australia and New Zealand, JB Hi-Fi Limited (ASX: JBH) has recorded a record FY21 result with profits rocketing 67.4%.
Shares have risen 2.59% in morning trade to $48.96.
JBH share price
Record full-year result
Sales momentum remained strong, with continued heightened customer demand for consumer electronics and home appliance products.
Total sales for the year increased 12.6% to $8.9 billion in FY21. Illustrating the shift to digital purchases, online sales increased 78.1% to $1.1 billion, representing 11.9% of total sales.
Improvement in gross margins across the business in addition to disciplined cost control subsequently led to significant operating leverage. Net profit after tax increased 67.4% to $506.1 million.
Departing CEO Richard Murray – who will be taking the reins at Premier Investments Limited (ASX: PMV), said:
“We are pleased to report record sales and earnings for FY21. Our continued focus on the customer, and investments in our online business and our supply chain, have enabled us to seamlessly meet our customers’ increased demand both instore and online.” Richard said “I would like to thank our over 13,000 team members who have continued”.
The company will release its full-year audited accounts on 16 August.
Cycling tough prior-year numbers
Notwithstanding heightened customer demand, fourth-quarter sales in FY21 fell compared to FY20.
The company is cycling tough comps in Q4, as this was the peak panic buying period resulting from the onset of the COVID-19 induced lockdown in March last year.
Additionally, the group is experiencing some disruption due to store closures in Victoria and New South Wales.
JB Hi-Fi Australia sales declined 7.8% and The Good Guys growth retracted 1.5%. Positively, JB Hi-Fi New Zealand sales jumped 46.9% albeit this is a minor contributor to overall group revenue.
Compared to a more normalised trading environment in FY19, JB Hi-Fi Australia sales increased 21.2%, JB Hi-Fi New Zealand 11.5% and The Good Guys 28.3%.
My take
With customers unable to travel abroad, many have opted to upgrade home appliances and splurge on consumer discretionary items.
This trend is not exclusive to JB Hi-Fi, with other retailers including Nick Scali Limited (ASX: NCK) and Premier Investments experiencing similar sales uplifts.
Most impressively, the 12% sales increase led to a near 70% jump in profits.
Despite the elevated trading levels, JB Hi-FI shares look cheap. With a market capitalisation of $5.6 billion and profits of $506 million, JB Hi-Fi is trading on 11x FY21 profits.
JB Hi-Fi remains on my watchlist. I’ll be observing the quarterly numbers to see if there is a significant drop off of sales in FY22 before making a buy decision.
