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JB Hi-Fi (ASX:JBH) share price jumps, sales keep booming in HY22

The JB Hi-Fi Limited (ASX: JBH) share price has surged 5% higher this morning after the ASX retail share reported its FY22 half-year result.

JB Hi-Fi’s solid start to FY22

JB Hi-Fi revealed some financial numbers that the market had already had a glimpse at. This result was for the six months to 31 December 2021.

  • Total HY22 sales were down 1.6% to $4.86 billion
  • Online sales rose 62.6% to $1.1 billion
  • EBIT fell 9.1% to $420.5 million
  • Net profit after tax dropped 9.4% to $287.9 million
  • Interim dividend of $1.63, down 9.5%

Whilst there was a bit of a decline in profitability year on year, there was good growth over a two-year period. Sales, EBIT and net profit went up 21.7%, 59.9% and 68.8% respectively over two years.

The business said it continued to see elevated demand across all of its sales channels, particularly online.

Shareholder returns

Not only has the company decided to pay out 65% of net profit as a dividend, but the retailer also announced an off-market share buy-back.

JB Hi-Fi revealed a capital return of up to $250 million. It’s looking to maintain an “optimal” capital structure while ensuring adequate capital is retained to sustain the future development of the business.

As a result of the continued strong financial performance and financial performance and cash flow generation, the group has surplus capital and a significant franking credit balance.

The buy-back will benefit ongoing shareholders by improving profit / earnings per share (EPS).

Combined, the interim dividend and buy-back will return $437 million to shareholders.

Trading update

JB Hi-Fi revealed some promising numbers for the first month of the second half of FY22.

In January 2022, total JB Hi-Fi Australia sales were up 4.3% and New Zealand sales were down 1.8%. The Good Guys sales increased by 2.5%.

Despite the disruption to the supply chain and operations as a result of COVID-19, it continued to see heightened customer demand and strong sales growth compared to two years ago.

Management comments

The JB Hi-Fi CEO Terry Smart said:

 While it remains an uncertain retail environment, we will continue to stay focused on what we can control. Our highly engaged in-store and online shopping experience delivered by our passionate and knowledgeable team members, and our continued focus on leveraging our scale to deliver great value will ensure we meet customers’ needs during these challenging times.

Summary thoughts on the JB Hi-Fi share price and result

This was a solid update from the company. Its sales continue to slowly rise. But they are rising. Operating leverage is very useful for a retail business like JB Hi-Fi.

The added bonus of a buy-back is a good choice for shareholders. It’ll be interesting to see if sales continue to stay strong, or if they drop back as the COVID economy normalises. But I think JB Hi-Fi is more defensive and reliable than some people think – everyone needs a phone, most people need a computer, most people will need to replace their appliance every so often.

I think that JB Hi-Fi is one of the better ASX dividend shares around too.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
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