JB Hi-Fi posts record sales, better-than-expected profit consumers splurge on new tech

JB Hi-Fi boss Nick Wells has attributed the retailer’s record sales and better-than-expected profit to customers defying cost-of-living pressures to upgrade to the latest phone, computers and other gadgets.

And while sales growth had slowed in January, Mr Wells said it was a result of customers pulling forward their shopping during peak promotional periods at the end of last year, like Black Friday and Boxing Day.

The retail bellwether — which also owns JB Hi-Fi New Zealand, The Good Guys chain and home appliance and bathroom retailer e&s — posted a 7.3 per cent jump in half-year revenue to a record $6.1 billion as net profit lifted 7.1 per cent to $305.8 million. Both results were one per cent ahead of consensus.

Pre-tax earnings hit $454m, 8.1 per cent higher than the same time last year and 2 per cent ahead of consensus.

Shares in JB Hi-Fi closed 7.5 per cent higher to $82.40 on Monday as investors focused on the company’s profit, earnings and sales results that beat estimates despite the softer trading update for January.

Mr Wells, who last October replaced long-serving chief executive Terry Smart, said electronic devices, particularly mobile phones, were increasingly becoming less discretionary for customers.

Asked if the results showed a resilient consumer spending, Mr Wells told The Nightly it was more of a reflection of its product offerings.

“Customers are prioritising spend on technology in JB Hi-Fi and at The Good Guys, it’s very much replacement home appliances,” he said.

“I’m sure cost of living is still a challenge for customers, it’s just maybe some of our product is a little bit less discretionary and is ranking higher in terms of a share of customer’s wallet than other categories.”

Mr Wells singled out the new iPhone 17, the $500 Ninja slushie machine, robotic vacuums and wearable tech like the Oura ring as some of the most popular items flying off the shelves.

Last December, Myer boss Olivia Wirth also called out the Ninja slushie machine as being popular.

The results from JB Hi-Fi — which has 352 stores across the three brands in Australia and New Zealand — offer insight into how consumer spending is holding up in the face of higher inflation and threats of more interest rate hikes.

The Reserve Bank of Australia earlier this month hiked the official cash rate to 3.85 per cent, marking the first monetary policy tightening in more than two years.

Mr Wells said it was too early to call out any impacts of the rate hike on consumer spending.

“We’ll have to just stay focus on what we can control, continuing to focus on our customer, continuing to drive value, continuing to make sure we’ve got great product available . . . just all those retail basics,” he said.

At the flagship JB Hi-Fi Australia stores, sales increased by 6.3 per cent to $4.12b in what the company said was “driven by continued customer demand for technology and consumer electronics products, and strong promotional execution”.

The key growth categories were mobile phones, small appliances, games hardware, computers and fitness. Pre-tax earnings rose 7.7 per cent to $340.9m.

It comes as the artificial intelligence boom drives memory chip prices higher, threatening to make personal computers and other consumer gadgets pricier.

“We are working very closely with our supply partners to make sure we have devices available for customers at all price points,” Mr Wells said.

“There will be a cohort of customers who will be potentially willing to spend a little bit more as well so we’re cautious on it, but we’re actively planning for it.”

At JB Hi-Fi New Zealand, sales grew 32.6 per cent to $NZ268.6m ($228.9m).

The retailer said The Good Guys benefited from Black Friday and Boxing Day promotional periods as customers splurged on portable appliances, floorcare, cooking, refrigeration and laundry.

Sales for the December half at its recently acquired e&s division hit $144.8m.

In January, comparable sales were up 2.4 per cent at JB Hi-Fi Australia, up 16.7 per cent at JB Hi-Fi New Zealand, up 2.7 per cent for The Good Guys but down 7.9 per cent at e&s.

Mr Wells said while he was pleased to see sales growth continue into January, he remained cautious “given the uncertainty in the retail market and the continued competitive activity”.

“January is not a promotional period and we can see that customers are clearly looking for a value and and those promotional periods are outperforming,” he said.

Jarden analyst Ben Gilbert said it was “another quality result” for JB Hi-Fi.

“JB’s executing well, balance sheet in good shape and structural support via AI take up, replacement cycle and housing strength, not withstanding rising rates,” he said.

Mr Gilbert said while the January performance was below consensus, “this may be better than feared with January also likely impacted by some stock shortages and product clearance”.

JB Hi-Fi rewarded investors with a 23.5 per cent hike in its interim dividend to $2.10 a share.