Investors not buying JB Hi-Fi's big profits
Results posted on Monday show JB Hi-Fi Australia sales rose 7.5 per cent for the year to $7.1bn, with profit rising 6 per cent despite tighter margins.
Despite a higher final dividend and a special dividend for shareholders, investors were not convinced of the company's worth, with the share price losing 8 per cent in the first three hours of trading.
JB Hi-Fi is a key indicator of consumer confidence in Australia; the $12.5bn company is the third-largest company on the ASX discretionaries sector.
The share price fell on Monday morning after the company announced chief executive Terry Smart would be stepping down after 20 years in charge.
The financial results were better than market expectations and bolstered by sales at premium home appliance retailer E&S, which the company bought in September.
JB Hi-Fi Ltd also owns The Good Guys, which posted a 6.9 per cent lift in sales ($2.9bn) and an even fatter profit increase (to 8.2 per cent).
The group's overall net profit was up 5.4 per cent (to $462.4m) but was dented after The Good Guys settled a lawsuit with the competition regulator for $13.7m over misleading statements about store credit.
At JB Hi-Fi's Australian stores, increasing sales were driven by the new Nintendo Switch despite more discounting and promotions cutting into margins.
Compared with the year prior, JB Hi-Fi New Zealand proved more profitable in all key measures.
The outgoing chief executive also presented shareholders an increased dividend and a special dividend.
'It has been another strong year of sales and earnings, as we built on the momentum of the previous year,' Mr Smart said.
'The company stayed focused on its core proposition of driving great value and delivering consistently high levels of customer service which continued to resonate.'
A final dividend of $1.05 was declared, bringing the total ordinary dividend to $2.75, a $0.14 increase on last year. JB Hi-Fi will also pay a fully franked $1 special dividend next month.
Mr Smart began working for the company in 2000, took a short break and came back in 2017, revamped The Good Guys and was reappointed group chief executive in 2021.
'The decision to leave was a difficult one to make, having been involved with the company for many years and being able to work with one of Australia's and New Zealand's best and most respected retail teams.
'I am proud of what we have achieved over the years.'
Chief operating officer Nick Wells will become chief executive, effective October 3.
'I have worked very closely with Nick for many years, particularly since my reappointment as group chief executive in 2021,' Mr Smart said.
'Nick has a great knowledge of the group's businesses and is highly respected by both our team members and stakeholders.
'With the support of the best retail management team in the market, I am sure that the group will continue to go from strength to strength under Nick's leadership.'
Chairman Stephen Goddard said under Mr Smart's leadership, sales and profit grew, and the share price hit record levels.
'We are sorry to see Terry go and wish him all the best for the future,' Mr Goddard said.
Originally published as Investors not buying JB Hi-Fi's big profits
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
7 hours ago
- The Age
ASX higher on rate cut hopes; JB Hi-Fi falls
Financial stocks were stronger, with Westpac up 1.9 per cent, ANZ rising 1.2 per cent and NAB adding 0.9 per cent. Commonwealth Bank, which will deliver its results on Wednesday, was 01.1 per cent higher. Loading Energy stocks were mixed, with Woodside adding 0.7 per cent, Yancoal flat and Santos slipping 0.1 per cent. The laggards Consumer discretionary stocks were the worst performing segment, down 1.6 per cent after a strong performance last week as JB Hi-Fi slumped 8.4 per cent to $107.83 despite boosting sales and profits as long-serving CEO Terry Smart announced his departure. He will be replaced by chief operating officer Nick Wells. The leadership announcement was made on the same day its full-year results were released, revealing a 10 per cent rise in sales to $10.6 billion, and a 5.4 per cent growth in profits to $462.4 million for fiscal 2025. The company has announced a fully franked final dividend of 105¢ a share, bringing the total dividend to 275¢ a share. It has also declared a special dividend of 100¢ a share. Wesfarmers fell 1.8 per cent, Aristocrat Leisure was down 1.1 per cent and Harvey Norman slipped 2.5 per cent. Australia's tech sector was underperforming the market, down 0.4 per cent as TechnologyOne sank almost 2.9 per cent to $39.18 and Xero lost 3 per cent. Gold miners took a breather as the precious metal eased around 1.5 per cent to $US3437.1 ($5269) an ounce. The lowdown The Australian sharemarket has made a bright start to the week ahead of Tuesday's Reserve Bank decision, with financial markets expecting the central bank to deliver the third cut in official interest rates this year. The top 200 briefly hit 8852.3, topping last week's intraday record of 8848.8 amid high expectations of a cut, Moomoo market strategist Michael McCarthy said. 'What many analysts seem to overlook is that just because the RBA [Reserve Bank of Australia] can cut doesn't mean it will cut,' he said. 'While core inflation at 2.7 per cent gives the RBA room to move, an unemployment rate of 4.3 per cent means it's not under any pressure to do so.' A refusal to cut on Tuesday could have a significant impact on the share market, McCarthy said. 'We expect the RBA to cut the cash rate by 25 basis points next week to 3.6 per cent... The overall tone of the statement will likely be neutral with a dovish lean,' Citi analysts wrote in a note. All eyes will be on Tuesday's decision as earnings season is hitting its stride, with CBA, Seven West, AGL, IAG, Suncorp, Telstra, Cochlear and Origin among companies reporting this week. Meanwhile, options traders are using currencies such as the Australian dollar and euro to express bearish US dollar views after recent disappointing American economic data. The Aussie is being supported by the Reserve Bank's 'cautious and gradual' stance on easing, as well as improving risk sentiment. The euro's allure has grown from expectations an increase in regional defence spending will support the euro-zone economy, and a more hawkish-sounding European Central Bank. Meanwhile, things look rockier for the US dollar as data showed jobs growth missed expectations in July with downward revisions to prior months as well. Standard Chartered Bank has seen 'a lot of interest' in euro-US dollar and Australian dollar-US dollar call options after non-farm payrolls, according to Saurabh Tandon, global head of foreign-exchange options in Singapore. The market is focusing on upcoming events such as US inflation and the Federal Reserve's Jackson Hole symposium, he said. National Australia Bank has seen a pick-up in demand for bullish Australian dollar option wagers, as well as for those on the New Zealand dollar. 'Following the recent non-farm payrolls, we've observed significant activity in AUD/USD and NZD/USD short-dated call options, in anticipation of a busy data week, including the US CPI release and the RBA meeting.' said Con Davelis, Sydney-based head of FX options at the bank. On Friday, the S&P 500 rose 0.8 per cent, finishing just shy of the record it set last week. The benchmark index also wiped out its losses from a slide last week. The Dow Jones rose 0.5 per cent and the Nasdaq composite added 1 per cent to the all-time high it had set a day earlier. Technology companies, with their hefty stock values, did much of the heavy lifting for Wall Street. Nvidia rose 1.1 per cent and Apple gained 4.2 per cent. Gilead Sciences jumped 8.3 per cent for one of the market's biggest gains. It reported financial results that easily beat analysts' forecasts, while also raising its earnings forecast for the year. Expedia Group rose 4.1 per cent after also reporting encouraging financial results. Loading They are among the final big batch of companies within the S&P 500 to report mostly strong financial results for the second quarter. Still, many have warned that current tariffs could cut into their profits. Financial sector stocks also helped drive the market higher. Bank of America gained 2.4 per cent and Mastercard rose 2.3 per cent. Elsewhere in the market, entertainment giant Paramount Skydance slid 10.5 per cent a day after the company was created by the closing of an $US8 billion ($12.3 billion) merger of Skydance and Paramount. Shares in rival Warner Bros. Discovery sank 8 per cent. The main focus throughout the week has been on President Donald Trump's trade war and its potential impact on the US economy, as well as the Federal Reserve's interest rate policy. Trump began imposing higher import taxes on dozens of countries on Thursday. Still, the market appeared to largely shrug off the latest tariff escalation. 'The S&P 500's rebound this week may highlight the extent to which the market is becoming numb to tariff headlines,' said Daniel Skelly, head of Morgan Stanley's wealth management market research and strategy team. The unknown path of the economy amid an unpredictable tariff policy has been the key reason for the Fed to hold its benchmark interest rate steady. Loading Fed chair Jerome Powell, though, has been under increasing pressure from Trump to cut interest rates. Policy decisions aren't made solely by the Fed chair. All 12 members of the Federal Open Market Committee vote on interest rate changes. Trump has an opportunity to exert more control over the Fed following his nomination of Stephen Miran to a vacancy on the Fed's board of governors. Miran is a top economic adviser to Trump and is a near-certain vote in support of lower interest rates. The Fed's last decision to hold interest rates steady included two votes to lower interest rates. Its next meeting is in September, and Wall Street is overwhelmingly betting that the central bank will cut interest rates by a quarter of a percentage point. Wall Street and the Fed will get more insight next week on inflation's temperature and the economy. The government will publish updates on inflation at both the consumer and wholesale levels, along with a report on retail sales.
7NEWS
7 hours ago
- 7NEWS
Reserve Bank predicted to slash interest rates on Tuesday amid cooling inflation
Markets are almost certain the Reserve Bank of Australia will cut interest rates at its August meeting despite the board facing an increasingly uncertain environment. Benign quarterly inflation figures released by the Australian Bureau of Statistics in July should convince the board to cut the cash rate in a two-day meeting that started on Monday, AMP deputy chief economist Diana Mousina said. Know the news with the 7NEWS app: Download today In fact, a cut of 25 basis points to 3.6 per cent should have happened already, Mousina declared. Mortgage holders will be hoping lightning doesn't strike twice after the central bank's board voted in a 6-3 decision to leave rates on hold in July, despite markets pricing in a near-certain chance of a cut. The majority of economists also expect a cut this time around, including 31 out of 34 experts surveyed by comparison website Finder. But with markets predicting another two cuts following this one, RBA governor Michele Bullock is likely to try to pare back expectations in her post-meeting communications after the meeting wraps up on Tuesday. 'We think that the RBA will still sound cautious on giving too much forward guidance and remain of the view that interest rates do not need to be aggressively cut for now, given their concern that upside inflation risks may occur again in Australia,' Mousina said. Another potential concern for Bullock could be developments at the US central bank. Mousina said we could be seeing the 'Trumpification' of the Federal Reserve after the US president 's appointment of ally Stephen Miran to replace departing governor Adriana Kugler. Miran's appointment heralds a more dovish Fed board, which could mean lower US interest rates if Donald Trump gets his way. 'Stephen Miran's appointment to the Federal Reserve board will likely increase pressure for deeper rate cuts while broadening concerns around Fed independence,' JP Morgan chief economist Bruce Kasman said. While the RBA has been more focused on domestic developments in recent months, the Fed's outsized influence on global borrowing costs can set the tone for international monetary policy. When the Fed cuts, central banks around the world have tended to follow. And a dovish turn could have consequences for the Australian dollar, investor expectations and the broader economy.
The Australian
7 hours ago
- The Australian
ASX surges to new heights as lithium stocks soar on Chinese battery news
Surging commodity prices, strong ASX results and widely predicted interest rate relief all helped drive the ASX higher during Monday's trading. The benchmark ASX 200 index gained 37.70 points or 0.43 per cent to 8844.80, after briefly touching a record intraday high of 88852.30 points. The broader All Ordinaries also gained 41 points or 0.45 per cent to 9117.60. The Aussie dollar last traded around US65.26c. On an overall positive day, nine of the 11 sectors gained, led by the materials, consumer staples, healthcare and major banks. On a positive day, nine of the 11 sectors finished higher Picture: NewsWire / Jeremy Piper Lithium miners led the gains with Mineral Resources up 12.18 per cent to $38.12, Pilbara Minerals soaring 19.69 per cent to $2.31 and Liontown Resources jumping 18.34 per cent to $1. Investors bought the sector on the back of Chinese battery giant Contemporary Amperex Technology suspending production at one of its key mining sites. Iron ore miners jumped after futures markets lifted the price of the commodity by 1.1 per cent after Beijing scrapped longstanding restrictions on the number of homes that city residents can buy in a suburban area. BHP gained 1.64 per cent to $40.87, Rio Tinto finished 1.47 per cent higher at $115.29 and Fortescue soared more than three per cent to $19.42. It was also a strong day for the big four banks. CBA jumped 1.13 per cent to $178.60, NAB gained 0.86 per cent to $38.82, Westpac climbed 1.93 per cent to $34.31 and ANZ finished in the green up 1.17 per cent to $31.24. Moomoo chief executive Michael McCarthy said Monday's jump was on the back of rates, with a refusal to move on them tomorrow afternoon likely to heavily impact the market. 'There are very high expectations of an interest rate reduction from the Reserve Bank of Australia tomorrow afternoon,' he said. 'Bank bill traders are pricing a possibility or a cut greater than 0.25 per cent. 'What many analysts seem to overlook is that just because the RBA can cut, doesn't mean it will cut. Markets climbed on the back of anticipated interest rate relief. Picture Newswire/ Gaye Gerard eToro market analyst Farhan Badami said while the July pause took everyone by surprise, banks have already started moving to cut interest rates ahead of tomorrow's meeting. 'While the July pause was a surprise, a consecutive pause in August will be a shock,' he said. 'Three cuts before the end of the year are still expected, but there's very little wiggle room left in the calendar if the RBA heightens its degree of risk aversion any further.' In company news, JB Hi-Fi chief executive Terry Smart will step away after more than two decades with the retail giant. The announcement came at the same time as the electronics giant reported a 10 per cent growth in sales to $10.6bn for the last financial year, while net profits after tax jumped 5.4 per cent to $462.4m. But the news of the big boss leaving the company outweighed the strong results with shares falling 8.39 per cent to $107.83. Car classified business Car Group announced a 10 per cent increase in net profit after tax to $275m, in the 2025 financial year. Shares finished up 0.54 per cent to $37.20. Defence business DroneShield shares also finished higher after telling the market it launched SentryCiv, a subscription-based artificial intelligence powered counter drone system. This is aimed at the civilian market. Despite initially surging, shares closed flat at $3.95 on the announcement. Read related topics: ASX
