JB Hi-Fi profit up 53pc on TV and video game sales

JB Hi-Fi intends to open 18 new outlets. Photo / Brett Phibbs

MELBOURNE - JB Hi-Fi, the best-performing retailer in Australia's benchmark stock index this year, increased second-half profit 53 per cent on sales of video games and flat-panel televisions.

Net income rose to A$35.4 million in the six months ended June from A$23.1 million a year earlier.

Second-half figures were calculated by subtracting first-half earnings from the A$94.4 million full-year profit the Melbourne-based company reported yesterday.

The shares rose the most since July 28.

New stores in regional areas and smaller outlets in cities are winning sales from customers and discounts from suppliers as consumer demand is stoked by A$12 billion of government cash handouts since December. Chief executive officer Richard Uechtritz is increasing staff incentives to maintain margins and sell more profitable products.

"It's a flawless performance whatever way you look at it," said investment manager Prasad Patka.

"JB Hi-Fi should be able to grow earnings faster than revenues this year."

JB Hi-Fi shares have surged 72 per cent this year compared with a 16 per cent gain in the benchmark S&P/ASX 200 index.

The annual profit of A$94.4 million beat the estimated A$92 million average as well as the company's June 9 forecast. Sales in 2010 fiscal year are expected to rise about 20 per cent to A$2.8 billion.

"We are expecting that without further stimulus we should still trade well in the current financial year," chairman Patrick Elliott said.

"We are seeing good growth in cameras, in games. We've seen good growth in visual as a category."

JB Hi-Fi plans to open 18 new outlets and has maintained its target of having a network of 210 stores, up from 123.

The company is using existing cash flow to fund its store expansion and is reducing net debt "each day", Elliott said.

The retailer increased its final dividend to 29 cents from 16 cents a year earlier.

- BLOOMBERG