JB Hi-Fi hits the right note with result

JB Hi-Fi will welcome a new chief executive this year. Photo / Brett Phibbs

SYDNEY - Retailer JB Hi-Fi has reported a 29 per cent increase in net profit for the first half of 2009-10 and announced chief executive Richard Uechtritz will step down in July/August this year.

JB Hi-Fi booked net profit of A$76 million ($96 million) for the six months to December 31, 2009, up from A$59 million in the prior corresponding period.

Sales were up 23 per cent to A$1.554 billion, from A$1.262 billion.

"Comparable store sales growth for the period was 9.9 per cent," the company said yesterday.

Comparable store sales growth was 10.2 per cent in Australia and 5.8 per cent in New Zealand.

Uechtritz said he was "extremely pleased" with the strong result, particularly the 6.5 per cent comparable store sales growth in December:

"JB has proven to be very resilient throughout the economic downturn, which led to low consumer confidence and spend." JB Hi-Fi chairman Patrick Elliott says Uechtritz will step down after 10 years at JB Hi-Fi. He will be replaced by current chief operating officer Terry Smart.

JB Hi-Fi said gross margins remained "relatively stable" despite competitor discounting and the strong performance of low margin categories.

The company said sales in January "met internal expectations", with comparable stores sales up 7.2 per cent.

"Whilst the retail outlook continues to be uncertain, the company is cautiously optimistic that it will have another strong year," JB Hi-Fi said.

JB Hi-Fi reaffirmed previous guidance of a 20 per cent increase in annual sales to A$2.8 billion.

It also confirmed full-year net profit after tax was expected to be A$117 million to A$120 million in fiscal 2010, up 24 to 27 per cent from fiscal 2009.

The company said it opened 15 new stores during the first half of fiscal 2010, and had plans to open seven more in the second half.

The 22 new stores in would be the most in any financial year since the company began operations.

There are currently 134 JB Hi-Fi stores, with 124 in Australia and 10 in New Zealand. Of those, 122 are JB Hi-Fi branded stores.

"We continue to grow our market share as recently opened stores mature. We open new stores, expand our offering and reduce our prices on the back of increased economies of scale and a continued focus on costs," Uechtritz said.

The company lifted its dividend to a fully-franked 33c per share, up from 15c in the prior corresponding period. It will be paid on March 5.

Elliott said the company's board had intended for some time that Smart would succeed Uechtritz: "His knowledge of the business is second to none and the board is confident in Terry's ability to continue executing the company's growth strategy." Smart said JB Hi-Fi was in a very strong and competitive position with many years of solid growth ahead of it.

"We operate in an industry where strong sales growth has been, and will continue to be, driven by constant technological advancements," he said.

"This underlying industry growth, combined with our recently opened stores maturing, the continued roll out of new stores and further refinement of our execution, will see us continue to be successful."

The company said Uechtritz would join the JB Hi-Fi board as a non-executive director in early 2011.

"The company will enter into a consulting agreement with Mr Uechtritz on his retirement, for a term of three years to facilitate his ongoing support of the business," JB Hi-Fi said.

Uechtritz said he was leaving to pursue personal and philanthropic interests.

"On a personal note, it is time for me. Ten years is a good innings as a CEO," Uechtritz said.

- AAP