The JB Hi-Fi Limited (ASX: JBH) share price suffered a fall after releasing its FY23 half-year result yesterday, despite reporting growth.
When a business suffers a fall, it can be useful to look at that ASX share and consider whether the market is being too harsh or is thinking too short-term about the situation.
Let's remind ourselves about what the business revealed.
Earnings recap
For the six months to 31 December 2022, the company generated total sales of $5.28 billion, which was an increase of 8.6%. JB Hi-Fi said there was continued elevated customer demand for electronics and home appliances.
The company pointed to the sales growth and gross profit margin improvement as the cause of the 14% increase in the earnings before interest and tax (EBIT) to $479.2 million.
Net profit after tax (NPAT) increased by 14.6% to $329.9 million and the interim dividend was bumped up by 20.9% to $1.97 per share.
While the six months to December 2022 demonstrated good growth, the trading update for January 2023 was less promising. Slowing growth could be a warning sign for some investors regarding JB Hi-Fi shares.
Trading update
The business reported how the first month of the second half went compared to January 2022 and January 2020.
JB Hi-Fi Australia's total sales were up 2.5% year over year, and up 25.5% compared to January 2020.
JB Hi-Fi New Zealand's total sales were up 20% year over year and up 43.4% compared to January 2020.
The Good Guys sales were flat (0% growth) compared to January 2022 and up 17% compared to January 2020.
The JB Hi-Fi CEO Terry Smart explained:
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.
Is the JB Hi-Fi share price a buy?
The broker Morgans certainly thinks so, with the rating improved to buy.
I think that this result once again showed that JB Hi-Fi is one of the leading retailers in Australia. Being able to grow sales in January 2023, despite many economic challenges, is an impressive achievement in my opinion.
The next 12 months could be tricky for the business and retail as a whole. I'd guess there are going to be fewer electronics and appliances bought in the next 12 months compared to the last 12 months.
However, the JB Hi-Fi share price is down around 20% since the peak in March 2022. I think this makes up for the short-term uncertainty.
I think the quality and scale of the business means it can easily ride through whatever happens next. Australia's growing population should also be a boost for long-term earnings.
In my opinion, the JB Hi-Fi share price is a buy for the long term. Investors can receive large dividends until the retail situation improves.
