The JB Hi-Fi Ltd (ASX: JBH) share price is rocketing on Monday morning.
At the time of writing, the retail giant's shares are up 8% to a record high of $72.78.
This follows the release of the company's full year results for FY 2024.
JB Hi-Fi share price rockets on strong result and special dividend
- Total sales down 0.4% to $9.59 billion
- Earnings before interest and tax (EBIT) down 11% to $647.2 million
- Net profit after tax (NPAT) down 16.4% to $438.8 million
- Earnings per share of 401.4 cents
- Total ordinary dividend of 261 cents per share
- Special dividend of 80 cents per share
- Acquisition of 75% stake in E. & S. Trading Co. for $47.8 million
What happened during FY 2024?
For the 12 months ended 30 June, JB Hi-Fi reported a modest 0.4% decline in sales to $9.59 billion. This decline was driven entirely by its The Good Guys business, which offset sales growth in JB Hi-Fi Australia and JB Hi-Fi New Zealand.
The Good Guys sales decreased by 4.8% to $2.68 billion, with comparable sales down 4.8%. Management advised that its core Home Appliance categories remained resilient, with the Consumer Electronics categories cycling elevated demand in the prior corresponding period. Online sales increased by 1.3% to $387.2 million or 14.5% of total sales.
JB Hi-Fi Australia sales increased by 1% to $6.61 billion, with comparable sales up 0.6%. This was driven by continued customer demand for technology and consumer electronics products. Also supporting its growth were well-executed Black Friday, Boxing Day and Tax Time promotional periods.
Management advised that key growth categories were Mobile Phones, Small Appliances, Cameras, Games Hardware and Services. Online sales increased by 2.8% to $1.03 billion or 15.5% of total sales.
JB Hi-Fi New Zealand sales jumped by 12.3% to NZ$327.9 million, with comparable sales up 1.6%. The key growth categories across the Tasman were Mobile Phones, Audio, Games Hardware, IT and Small Appliances. Online sales increased by 32.4% to NZ$42.6 million or 13% of total sales.
Due to a combination of higher costs and discounting, the company reported a 16.4% decline in NPAT to $438.8 million for the 12 months.
Nevertheless, this didn't stop JB Hi-Fi from rewarding its shareholders with a generous dividend. The company declared a fully franked final dividend of 103 cents per share, which brought its total dividends to 261 cents per share for FY 2024. This is down 16.3% year on year.
However, a special fully franked dividend of 80 cents per share was also declared, boosting the total dividends for the year to 341 cents per share. This represents a 9.3% increase year on year. Management notes that the special dividend combined with the final dividend will distribute $200 million to shareholders.
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were expecting the company to report sales of $9.586 billion, EBIT of $625 million, and NPAT of $424 million.
This means that it has delivered sales in line with expectations but earnings well ahead of Goldman's estimates.
This may explain why the JB Hi-Fi share price is rocketing on Monday.
Acquisition
In other news, the company announced that it has entered into an agreement to acquire E. & S. Trading Co. (e&s), with an initial acquisition of 75% for cash consideration of $47.8 million.
JB Hi-Fi CEO Terry Smart commented:
e&s is a high-quality business that prides itself on offering the world's leading kitchen, laundry and bathroom brands at great prices, with expert advice and exceptional customer service.
e&s have a highly complementary premium product offering, which will appeal to a new customer base, and a commercial construction market focus, making it a strategically compelling addition to the Group.
It has 10 showrooms in Victoria and online, plus one showroom in ACT that is due to open this month. It currently generates revenue of ~$230 million and normalised EBITDA of ~$7 million.
JB Hi-Fi has a put and call option arrangement in place for the acquisition of the remaining 25% in September 2029.
Outlook
Management advised that July sales were in line with its expectations. For the period 1 July 2024 to 31 July 2024, total sales growth was as follows:
- JB HI-FI Australia was 5.6% with comparable sales growth of 5.2%.
- Total sales growth for JB HI-FI New Zealand was 12.2% with comparable sales growth of -4.9%
- Total sales growth for The Good Guys was 2.7% with comparable sales growth of 2.7%.
Commenting on its outlook, Smart said:
It is pleasing to see sales momentum in Australia continue into July. We remain committed to offering the best value and exceptional customer service to maximise our brands sales opportunities.
As always, the results are a credit to our over 15,000 team members whose support and commitment ensure the ongoing success of the business. We will remain focused on our customer's needs and continue to innovate as we navigate another uncertain year.
