JB Hi-Fi [ASX:JBH] Dividends Increase Yet Growth Starts to Slow

Major electronics and entertainment retailer JB Hi-Fi [ASX:JBH] has said that it will be lifting its dividends thanks to rising revenue and profit in fiscal 2023. However, a tense economy and normalising conditions means growth is starting to slow.

With many retailers complaining about lowering margins on inflation pressure and low consumer sentiment, even JB Hi-Fi is now showing it’s not completely immune.

A JBH share was worth $45.33 at the time of writing. Shares are sliding more than 2.5% after the half-year report was made public.

JBH has lost 7.5% in full-year stock value. Although it’s doing well in its sector, JBH is below the wider market average by nearly 10%.

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JB’s luck continues for HY 2023

The retailer reported total sales had grown 8.6% for the six months ending 31 December, with a total of $5.28 billion.

Net profit after tax rose by 14.6% to $329.9 million, and EBIT (earnings before internet and tax) also climbed 14% — to a total of $479.2 million — assisted by a strong surge in sales growth as well as improving gross margins.

JBH said total sales growth in Australia increased by 2.5% in January, with a comparable sales growth of 1.5% and total sales rising by 9.1% to $3.59 billion.

Good Guys total sales grew by 7.3% to $1.54 billion, with comparable sales up 7.3%.

Rising profits and revenue in the half-year saw JBH declare an interim dividend of $1.97 a share, which was an uplift of 20.9% on the same time last year. Earnings per share went up by 20.4% to $301.8 compared to the previous period. This is also fully franked and represents 65% of NPAT.

For the end of the year 2022, JBH reported it had $391.2 million in cash and equivalent — and inventories of more than $1.2 billion.

Terry Smart, the group’s CEO, commented on the beginning of a balance-out post-COVID:

‘We are pleased to report record sales and earnings for HY23 as trading conditions started to normalise following two years of Covid related disruptions. Our relentless focus on providing the best value and high levels of customer service every day, both in store and online, continues to resonate with our customers.’

Source: JBH

JBH braces for balance

JB admitted that while these were good results boosted by Black Friday and Boxing Day promotions, they could have been better.

The group joins many others suffering from rising business expenses linked to inflation and lingering effects caused by COVID-19 store closures in the previous corresponding period.

On top of inflationary pressure catching up with the business, and any post-COVID effects the group also flagged trading results were starting to normalise. Mr Smart stated:

‘While we are pleased with the January trading result, with sales continuing to be well above pre Covid January 2020, we have seen sales growth start to moderate from the elevated levels seen in the first half of FY23.

‘As we enter an uncertain period, our business is well placed with a proven ability to adapt to any changes in the retail environment and trusted value-based offerings that will continue to resonate with our customers and grow our market share.’

Regards,

Mahlia Stewart,

For Money Morning

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