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Strong FY21 result: JB Hi-Fi (ASX:JBH) share price in focus

The JB Hi-Fi Limited (ASX: JBH) share price is in focus this morning after the electronics retailer released its FY21 result.

JB Hi-Fi’s FY21 result

The retailer reported that total sales increased 12.6% over FY21 to $8.9 billion. Within that, online sales surged 78.1% to $1.1 billion.

JB Hi-Fi experienced operating leverage, combined with sales growth, which saw EBIT (EBIT explained) increase by 53.8% to $743.1 million.

Net profit after tax (NPAT) grew even faster – going up 67.4% to $506.1 million. Profit/earnings per share (EPS) jumped 67.5% to 440.8 cents.

The company said that it was able to reduce its cost of doing business and grew its margins.

A key part of the growth was its online and digital offerings, including upgrades to its website. Online sales represented 11.9% of total sales. Excluding Victorian sales where stores were temporarily closed in the first half, online sales represented 10.3% of total sales.

JB Hi-Fi dividend

The board of JB Hi-Fi decided to declare a final dividend of 18.9% to 107 cents per share. That brings the total dividend for FY21 to 287 cents per share, up 51.9%.

JB Hi-Fi said it’s going to continue to regularly review the group’s capital structure with a focus on maximising returns to shareholders and maintaining balance sheet strength and flexibility.

FY22 trading update

There is a lot of disruption right now – lockdowns in Australia’s two biggest cities and strange comparables from 12 months ago (plus lots of government stimulus since March 2020).

The company provided a sales update for the period 1 July 2021 to 15 August 2021.

Compared to FY21, JB Hi-Fi Australia sales fell 14.6%, JB Hi-Fi New Zealand sales rose 8.4% and The Good Guys sales were down 8.1%. But compared to FY20 (July and August 2019), sales across the three divisions’ sales were up 19.1%, 14.8% and 28.9% respectively.

This is a similar situation to Nick Scali Limited (ASX: NCK) which also recently reported a sales decline in FY22.

Management comments

JB Hi-Fi incoming CEO Terry Smart said: “While it remains an uncertain retail environment, we have continued to demonstrate our ability to adapt and respond. The combination of our passionate and knowledgeable team members, our multichannel offer, including quality store locations and established online offerings, and our ongoing investment in our supply chain gives us confidence in the outlook for the business.”

Summary thoughts on JB Hi-Fi and the share price

The retailer has had a very strong year. It’s impressive how much profit margin growth the business has been able to achieve, though it seems that’s unlikely to be repeated again. But, I think JB Hi-Fi is more of an essential retailer than people give it credit. It sells huge amounts of phones, computer and appliances. For most households, those items are not exactly frivolous discretionary items. I prefer it to Harvey Norman Holdings Limited (ASX: HVN).

I think it could still be a decent medium-term idea after the market’s reaction to the falling comparable sales in FY22. It could be one of the solid long-term ASX dividend shares.

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The JB Hi-Fi Limited (ASX:JBH) share price is in focus this morning after the electronics retailer released its FY21 result.
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