The JB Hi-Fi Limited (ASX: JBH) share price is under the spotlight after the company reported a solid FY24 result and an exciting FY25 update.
JB Hi-Fi is a retailer of various electronic devices and home appliances across JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.
JB Hi-Fi result
Here are some of the highlights from the result for the 12 months to 30 June 2024:
- Total sales flat at $9.6 billion
- EBIT of $647.2 million
- Net profit after tax (NPAT) down 16.4% to $439 million
- Profit / earnings per share (EPS) down 16.5% to $4.01
- Final ordinary dividend down 10.4% to $1.03 per share
- Full-year ordinary dividend down 16.3% to $2.61 per share
- Special dividend declared of $0.80 per share
It was a challenging year for the business because of the “tough retail environment where customers are seeking value”.
Looking at the underlying performance, costs increased largely due to inflation.
JB Hi-Fi Australia total sales increased 1%, with growth for mobiles phones, small appliances, cameras, games hardware and services. Online sales rose 2.8% to $1.03 billion, representing 15.5% of total sales. This division’s EBIT dropped 11% to $491.2 million.
JB Hi-Fi New Zealand total sales increased 12.3% to NZ$327.9 million, with growth in mobiles phones, audio, games hardware, IT and small appliances. Online sales increased 32.4% to NZ$42.6 million, representing 13% of total sales. It reported negative EBIT of NZ$2.3 million.
The Good Guys total sales declined 4.8% to $2.68 billion. The home appliances categories remained “resilient”. Online sales grew by 1.3% to $387.2 million, or 14.5% of total sales. The Good Guys EBIT sank 25.8% to $158.1 million.
The company decided to pay a special dividend because of its elevated net cash position and a significant franking credit balance.
E&S acquisition
JB Hi-Fi announced it’s buying E&S, a business that operates across the kitchen, laundry and bathroom product segments.
It has 10 showrooms in Victoria and one showroom in the ACT to open in August 2024. The business has an established commercial offering in Victoria servicing builders, developers and architects.
In FY24 it made revenue of approximately $230 million and underlying EBITDA of approximately $7 million.
This acquisition was attractive because it’s “highly complementary” to its existing brands, providing new and expanded customer segments and product categories.
JB Hi-FI expects to be able to grow E&S both in Victoria and nationally.
It’s buying 75% of the business for $47.8 million in cash on a cash-free / debt-free basis, funded by existing cash. The business has arrangements in place to buy the remaining 25% in September 2029.
This business was established in 1962 by the Sinclair family, and Rob Sinclair will continue as Managing Director of the business.
Outlook for the JB Hi-Fi share price
The July 2024 sales update was solid and “in line” with expectations.
JB Hi-Fi Australia sales grew 5.6% year on year, JB Hi-Fi New Zealand sales grew by 12.2% and The Good Guys sales grew by 2.7%.
At the pre-open price, JB Hi-Fi shares were up around 40% over the past year. Investors have been expecting a good performance going into FY25.
JB Hi-Fi is definitely one of Australia’s best retailers, and its product categories seem to be seeing more consistent demand.
However, this isn’t the time I’d choose to invest. Times of weakness surrounding retailers could be a better opportunity, so I’d rather wait until then. But, it is one of the more impressive ASX dividend shares, in my opinion.
