JB Hi-Fi share price slumps on half-year results

JB Hi-Fi had a strong first half but sales have started to become more challenging…

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Key points

  • JB Hi-Fi has released its half year results
  • The retail giant had a strong half
  • This underpinned strong profit growth and a big interim dividend

The JB Hi-Fi Limited (ASX: JBH) share price is on the slide on Monday morning.

At the time of writing, the retail giant's shares are down 3% to $45.18.

This follows the release of the company's half year results this morning.

JB Hi-Fi share price slumps on half year results

  • Total sales up 8.6% to $5.3 billion
  • Net profit after tax up 14.6% to $330 million
  • Earnings per share up 20.4% to 301.8 cents
  • Interim dividend up 20.9% to 197 cents per share

What happened during the half?

For the six months ended 31 December, JB Hi-Fi reported an 8.6% increase in sales to $5.3 billion.

A key driver of this growth was a 9.1% increase in JB Hi-Fi Australia sales to $3.59 billion. This reflects an 8.5% lift in comparable sales, underpinned by growth in communications, audio, accessories, computers, and fitness categories. This offset a 34.8% decline in online sales.

Elsewhere, total sales were up 16.1% in New Zealand and 7.3% at The Good Guys. The latter was driven by growth in refrigeration, laundry, floorcare, visual, and audio categories. Once again, online sales were down 21.5% on the prior corresponding period.

JB Hi-Fi's gross profit increased quicker than sales thanks to margin improvements. Management advised that this reflects improvements in key product and service categories and positive sales mix.

This ultimately led to the company reporting a 14.6% increase in net profit after tax to $330 million and, thanks to its buyback reducing its share count, a 20.4% increase in earnings per share to 301.8 cents.

In light of this strong form, the JB Hi-Fi board declared an interim dividend of 197 cents per share, which is up 20.9% year over year. The record date for this dividend is 24 February, with the payment then to be made on 10 March.

Management commentary

JB Hi-Fi's CEO, Terry Smart, was rightfully pleased with the half. He commented:

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.

Outlook

Given how most of JB Hi-Fi's first half result was pre-released last month, its outlook is likely to be the main focus for investors today.

Unfortunately, management revealed that its sales growth is now slowing in Australia, which could be weighing on the JB Hi-Fi share price today.

In January, total sales growth for JB Hi-Fi Australia was 2.5% and The Good Guys sales were flat.

Though, things are notably better across the Tasman, with JB Hi-Fi New Zealand reporting a 20% increase in sales during the month.

Mr Smart added:

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.

The JB Hi-Fi share price is down 13% over the last 12 months, as you can see below.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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