JB Hi-Fi climbs 7pc after unveiling plan to buy shares

Strong cash flows are behind JB Hi-Fi's decision. Photo / Brett Phibbs

Shares in JB Hi-Fi jumped 6 per cent after it said it would buy back up to 10 per cent of its stock.

The stock gained A$1.37, or 7.42 per cent, to a one-month high A$19.83 yesterday.

The company also reduced its full-year profit guidance because of costs to restructure its discount electrical retailing brand Clive Anthonys.

JB Hi-Fi said that the company intended to buy back up to 10 per cent, or A$170 million, of its shares through an off market buy-back. It said the cost would be A$0.7 million, about one month's financing cost.

JB Hi-Fi's chief executive Terry Smart said that the company was going to buy back shares because of ongoing strong cashflow generation.

"We continue to take a prudent approach to the management of our balance sheet and we are now in a position to return capital whilst still maintaining financial flexibility to invest in growth opportunities," Smart said.

JB Hi-Fi said net profit for the 12 months to June was now likely to be A$108.5 million to A$113.5 million, compared with the previous forecast of A$134 million to A$139 million.

That would mainly be due to a A$24.8 million charge to restructure the Clive Anthonys business.

JB Hi-Fi said the decision to restructure Clive Anthonys followed a strategic review of the business, which comprises 10 stores with forecast revenue for the full year of about A$140 million.

The strategic review was done following several years of disappointing returns, which deteriorated further in the first half.

JB Hi-Fi also said that the company had appointed former chief executive Richard Uechtritz as a non-executive director, as was planned when he retired as chief executive in February 2010. The company also appointed Beth Laughton as a director, while Will Fraser will retire from the board in September.

- AAP