JB Hi-Fi’s profits drop 20 per cent in ‘tricky’ sales environment

<div>JB Hi-Fi’s profits drop 20 per cent in ‘tricky’ sales environment</div>
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JB Hi-Fi’s profits have dropped by almost 20 per cent in the retail giant’s latest half-year results.

The result for the retailer, which also owns The Good Guys, was better than the market expected and led to shares jumping by more than 5 per cent in early trading this morning.

The results for July to December, released today, showed profits were $264.3 million, down 19.9 per cent from the same period in 2022.

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<div>JB Hi-Fi’s profits drop 20 per cent in ‘tricky’ sales environment</div>

Sales have also fallen, albeit by a much smaller 2.2 per cent, to $5.16 billion as households around the country cut back on spending amid the cost of living crisis.

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“JB Hi-Fi beat profit and sales estimates today as the household retailer continues to show resilience despite a pullback in consumer spending, but the bad news is that profits fell by 20 per cent from the same period a year ago,” eToro market analyst Josh Gilbert said.

“As a result, JB Hi-Fi cut its dividend to $1.58 from $1.97, which may not come as a surprise but will disappoint some shareholders, given that the cut was more significant than expected.”

The retailer’s share price had jumped more than 5 per cent to just under $60 by 10.30am following the release of the results.

“There are some positives for investors to take away,” Gilbert said.

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“Sales have topped estimates amidst a tricky environment for retailers, and we didn’t see a sharp slowdown in sales in January that many had expected.

“Profits have slipped, but this was always to be expected.

“These results won’t blow the market away, and investors should know that it will be a challenging end to the fiscal year for JB as retail sales slow further, with decade-high interest rates continuing to take their toll on households.

“However, management has shown they can navigate tough periods, and coming interest rate cuts as early as June will remain a positive tailwind.”

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JB Hi-Fi chief executive Terry Smart said the results were strong in a difficult environment.

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“We are pleased with our performance as we cycled the elevated customer demand in the prior year,” he said.

“As expected, we saw the trading environment become more challenging, marked by heightened competitive activity and increased on-floor discounting.

“Our focus remained on maximising customer demand through delivering consistently high levels of customer service and driving best value for our customers.”

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