Why JB Hi-Fi Share Price Fell 6.5% on Positive Earnings

Aussie retailer JB Hi-Fi Ltd [ASX:JBH] released a limited earnings report. There were a number of encouraging figures in the report:

  • Total sales up 41%;
  • Earnings before interest & tax (EBIT) up 24.9%;
  • Net profit after tax (NPAT) up 21%;
  • Earnings per share (EPS) up 13.7%; and
  • Interim dividend increased 19.4% from 2016.

Yet, at time of writing, JBH is down almost 6.5%.

Why the JBH share price fell

Though the giant retailer brushed off Amazon’s arrival and posted improved earnings figures, investors were disappointed by the lower-than-expected sales growth in New Zealand, and the newly acquired The Good Guys.

Total NZ sales were down 0.4%, and sales growth for The Good Guys in January was -3.5%

The group acquired retailer The Good Guys in 2016, which has increased revenues since.
However, sales growth for the new addition in January slumped 3.5%, which is said to be impacted by cycling strong sales of seasonal products. On that, CEO Richard Murray announced:

We are pleased with the progress we have made at The Good Guys and are confident about the future opportunities for the Group.

What’s next for JB Hi-Fi?

The group expects a heavy focus on sales and market share in the second half of financial year 2018. There is an expected change to the sales mix, which could result in sales growth exceeding gross-profit-dollar growth.

Total group sales are estimated to be around AU$6.85 billion, split between $4.75 billion and $2.1 billion for JB Hi-Fi and The Good Guys respectively. NPAT is forecast to be in the range of AU$235–240 million, representing up to a 15.5% increase on underlying NPAT.

Murray noted: ‘We are pleased with our performance in the first half of the 2018 financial year. We are clear on our objectives for the next 12 months and are excited in the outlook for the business.

The group hit 12-month highs at the end of January, defying short-sellers that have been bearish on Aussie retail for most of 2017.


Ryan Dinse                                                        

Editor, Money Morning                               


Jack Cameron,

Junior Analyst, Money Morning

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

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