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JB Hi-Fi (ASX:JBH) share price on watch after bumper profit and dividend growth

JB Hi-Fi share price
Credit: Peter Heath

The JB Hi-Fi Limited (ASX: JBH) share price will be one to watch on Monday.

This follows the release of its half year results this morning.

How did JB Hi-Fi perform in the first half?

For the six months ending 31 December 2020, JB Hi-Fi reported a 23.7% increase in total sales to $4.9 billion. This was driven by strong same stores sales growth across the business and a massive 161.7% jump in online sales to $678.8 million.

In respect to the performance of its individual businesses, JB HI-FI Australia was arguably the star of the show with a 23.3% increase in sales to $3.36 billion. This was supported by a 9.1% lift in JB HI-FI New Zealand sales to NZ$144.9 million and a 26.4% jump in The Good Guys sales to $1.45 billion.

Thanks to the elevated sales growth and disciplined cost control, the company reported an expansion in its margins. This underpinned a 76% increase in earnings before interest and tax (EBIT) to $462.8 million and an 86.2% jump in net profit after tax to $317.7 million.

Pleasingly for shareholders, this strong profit growth led to a big dividend increase. The JB Hi-Fi board declared a fully franked interim dividend of $1.80 per share, which is up 81.8% on the prior corresponding period.

How does this compare to expectations?

Given that much of this result was pre-released by the company, this strong sales and profit growth was already factored into the JB Hi-Fi share price.

However, the dividend of $1.80 per share is new information and actually ahead of what many experts were expecting.

Goldman Sachs, for example, was forecasting a $1.78 per share dividend to be declared.

Outlook

Also potentially giving the JB Hi-Fi share price a boost today was its trading update for the month of January.

Management advised that during January, JB Hi-Fi Australia delivered a 17.3% increase in sales thanks to another big lift in comparable store sales. Things were even better in New Zealand, with JB Hi-Fi New Zealand delivering sales growth of 21.7%. The Good Guys business also performed strongly, achieving sales growth of 14.1% for the month.

However, no guidance has been given for the full year due to COVID-19 uncertainties.

Management advised: “Strong sales momentum has continued into January across all brands. Whilst the Group is pleased with its start to the second half, in view of the ongoing uncertainty arising from Covid-19, the Group does not currently consider it appropriate to provide FY21 sales and earnings guidance.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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