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JB Hi-Fi share price on watch after smashing earnings estimates in FY 2019

The JB Hi-Fi Limited (ASX: JBH) share price will be on watch this morning after the retailer released its full year results for the 12 months ended June 30.

How did JB Hi-Fi perform in FY 2019?

In FY 2019 JB Hi-Fi posted a 3.5% increase in revenue to $7.095.3 million, a 6.4% lift in earnings before interest and tax (EBIT) to $372.8 million, and a 7.1% lift in profit after tax to $249.8 million.

Earnings per share came in 7.1% higher year on year at $2.174, allowing the JB Hi-Fi board to declare a 51 cents per share fully franked final dividend. This was up almost 11% on the prior corresponding period and took its full year dividend to $1.42 per share fully franked.

What the drivers of the result?

Total JB Hi-Fi Australia sales were up 4.1% to $4,726 million and comparable sales growth was 2.8%. The company reported a strong finish to FY 2019, especially during the key tax time promotional period which led to fourth-quarter comparable sales growth of 3.3%. EBITDA growth came in at 2.6%.

Supporting this was continued growth in online sales in Australia. They grew 23% to $258 million or 5.5% of total sales. This compares to 4.6% of total sales in FY 2018.

Total JB Hi-Fi New Zealand sales in FY 2019 were up 2% to NZ$236.2 million, with comparable sales up an impressive 8.2%. Sales growth, combined with cost control, drove EBITDA growth of 56.1% during the 12 months.

The Good Guys business saw total sales increase 2.2% to $2,147.9 million and comparable sales growth was 0.9%. Online sales rose 3.7% to $130.9 million after strong sales on The Good Guys website were partially offset by a decline in third party marketplace sales. Online sales now account for 6.1% of total The Good Guys sales, up from 6% last year.

Once again, this sales growth, combined with gross margin expansion, drove strong EBITDA growth of 10.6%.

Outlook.

The company’s JB Hi-Fi Australia business has had a positive start to the year with total sales growth of 4.1% and comparable sales growth of 3.2% during July. However, the New Zealand and The Good Guys businesses have both posted declines in sales during the month.

Looking ahead, management has provided guidance of sales of ~$7,250 million in FY 2020, which will be a ~2.2% increase year on year.

How does this compare to expectations?

According to a note out of Goldman Sachs, it was expecting JB Hi-Fi group sales of $7,102 million and EBIT of $362.3 million in FY 2019, which was a touch higher than the market consensus estimate.

Although the company has fallen short on sales, it has smashed earnings expectations. So, if investors are willing to look past its soft start to FY 2020, this could potentially mean a positive day of trade for its shares on Monday.

Also on watch this morning will be the Ansell Limited (ASX: ANN) share price following its full year results release and the Fonterra Shareholders’ Fund (ASX: FSF) share price after a disappointing market update.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.