3 days ago
Retiring JB Hi-Fi boss Terry Smart crosses his fingers for an RBA rate cut as retailer posts 5.4pc profit lift
Outgoing JB Hi-Fi boss Terry Smart has his fingers crossed for a widely-anticipated interest rate cut on Tuesday, warning it will take more than two rounds of rate relief to get consumers splurging on new gadgets and tech.
His comments on Monday came after the retail bellwether — which also owns JB Hi-Fi New Zealand, The Good Guys chain and home appliance and bathroom retailer e&s — delivered a 5.4 per cent lift in full-year net profit to $462.4 million, in line with market expectations.
Total sales in the year to the end of June grew 10 per cent to hit $10.6b, while earnings rose 7.3 per cent to $694.1m. Both were broadly in line with consensus.
'With the interest rate cuts that we've already had, hopefully we'll see tomorrow . . . some more positivity come back into the market and hopefully drive some sales even further,' Mr Smart told The Nightly.
'We didn't anticipate that we would see an immediate response to one or two interest rate cuts, it may take a few to really build up that momentum.'
It was also announced Mr Smart would retire in early October and be replaced by current chief operating officer Nick Wells.
It marks Mr Smart's second departure from the retailer, having held the CEO position for four years until June 2014.
He rejoined the company in early 2017 as chief of The Good Guys, before being reappointed as group CEO in 2021.
Mr Smart's looming departure weighed on JB Hi-Fi shares, with the stock down 7.5 per cent to $108.81 just before 1pm on Monday.
UBS analyst Shaun Cousins said the CEO transition was expected but the timing was a little earlier than anticipated. However, he remains confident JB Hi-Fi can continue to execute.
JB Hi-Fi's group earnings took a $13.7m hit related to a legal action by the consumer watchdog against The Good Guys over certain store credit and StoreCash promotions.
At the flagship Australian JB Hi-Fi stores — which makes up the lion's share of sales — revenue rose 7.5 per cent to $7.1b, driven by continued high consumer demand, new product releases and strong promotional activity.
Mobile phones, small appliances and computers continued to be the key growth areas.
The launch of Nintendo Switch 2 in the fourth quarter also helped to lift sales of games hardware.
Online sales are also becoming an increasingly more powerful revenue driver for JB Hi-Fi, increasing by 16.4 per cent to $1.19b — or 16.8 per cent of total sales — as shoppers embraced the click-and-collect offering.
JB Hi-Fi also operates 23 stores in New Zealand, where sales increased 20.8 per cent to $NZ396.3m ($361.6m). Comparable sales — which excludes new stores — grew 9.2 per cent.
Sales at The Good Guys rose 6.9 per cent to $2.87b, with comparable sales up 6.5 per cent.
Last September, the group completed the acquisition of 75 per cent of e&s, which was described as a highly complementary premium home appliance and bathroom retailer. For the period of ownership, total sales were up 5.2 per cent to $225.2m.
Commenting on his decision to leave, Mr Smart said he was proud of what had been achieved over the years.
'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,' he said.
JB Hi-Fi will pay out a final dividend of $1.05 a share, fully franked, up 2¢ and bringing the total ordinary dividend to $2.75.
It will also pay out a special dividend of $1-a-share fully franked.
And in more good news for investors, the company said it would up its payout ratio from 65 per cent to a range of between 70 and 80 per cent of after-tax profits.
