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Investors cheer JB Hi-Fi’s results

Electronics retailer JB Hi-Fi (ASX: JBH) has reported a solid sales growth number of 5.8% for the financial year ending June 2013. Sales revenue totalled $3.13 billion which included the benefit of a net increase of 10 new stores, taking the total network to 176 stores across Australia and New Zealand. Based on comparable store sales, growth was a more muted — 0.6% however from a forward earnings perspective second half comparable store sales growth of 3.2% suggests that the retailing environment may be improving.

Turning to the bottom line, net profit after tax was up an impressive 11.2% to $116.4 million driven by a decrease in discounting which saw the grow margin increase by 43 basis points. Earnings per share were up 11.1% to 117.7 cents per share. Given its policy to pay out approximately 60% of earnings, this led the board to declare a final dividend of 22 cents (which will be paid on 6 September) and brings the full year dividend to 72 cents per share.

Looking ahead the company provided guidance that it expects total sales to increase by between 6% and 8% in 2014.

Bricks and mortar electronics retailers, such as JB Hi-Fi and competitor Harvey Norman (ASX: HVN) have been struggling to come to terms with structural challenges for some time. JB Hi-Fi under the guide of CEO Mr Terry Smart has done better than most at navigating these headwinds.

Importantly, the “out of store” division, which encompasses online sales has been growing strongly – which suggests JB Hi-Fi has managed to utilise its brand name to attract online customers. Online sales were up nearly 30% over the financial year and now represent approximately 2% of total sales. The recently announced deal between Dick Smith and David Jones (ASX: DJS) is another example of an attempt to capitalise on brand power and better leverage it to grow online sales too.

Foolish takeaway

Investors were pleased with JB Hi-Fi’s result and sent the shares up 2.6% to $19 in early trade. Assuming earnings and dividends per share can grow by 10% over the next 12 months, the stock is trading on an attractive 14.6 times and a dividend yield of 4.2% which looks pretty appealing.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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