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JB Hi-Fi lifts full-year profit 13.3 per cent

Consumer electronics retailer JB Hi-Fi has lifted full-year profit 13.3 per cent to $172.4 million in the 2017 financial year.

Total sales for the 12 months to June 30 leapt 42.3 per cent to $5.63 billion following the companies acquisition of The Good Guys in November, while underlying profit rose 36.5 per cent once costs associated with the acquisition were stripped out.

The company expects to incur between $2 million and $4 million in implementation costs in the first half of financial year 2018. It now expects synergies from the merger to reach the upper end of its target – between $15 million and $20 million – by financial year 2019, one year earlier than originally anticipated.

The company will continue to seek efficiencies and drive synergies and will reinvest any gains into the business. It expects to deliver a number of initiatives during the course of financial year 2018, following the merger of JB Hi-Fi’s and The Good Guys’ supply chain teams.

Looking ahead, JB Hi-Fi expects sales to rise about $6.8 billion in 2018, following what it says was a strong start to the financial year. But according to the Australian Bureau of Statistic’s retail data for electrical and electronic goods, the short-term outlook does not look overly positive.

“As cost of home ownership continue to crimp household spending and wages growth experiencing some of the lowest growth in recent times, the retail sector, including the electrical and electronic goods sector, may struggle in the short term and an uncertain longer term outlook,” said Hianyang Chan, senior research analyst at Euromonitor International.

Chan went on to say that the upcoming entry of Amazon in Australia will squeeze margins, forcing retailers like JB Hi-Fi to be more dynamic in their range and prices.

“The upcoming entry of Amazon into the Australian retail landscape is expected to squeeze retailer margins by offering lower prices for a wide range of products and better delivery experiences, which prompts more consumers to shop online through their digital store. This will have a material impact across many major retailers in Australia, especially within the electronics and appliances retail market and the JB Hi-Fi group will be no exception,” he said.

“It is expected that the JB Hi-Fi group will seek to be even more dynamic in their inventory range and prices to meet consumer demands, increasing investment to strengthen their digital presence and further improvement in customer experiences and efficiencies within their supply chain to better position themselves to compete with the upcoming Amazon onslaught.”

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