However, the company would attempt to maintain positive same-store sales and defend its market position “in a sensible and measured way,” Mr Murray said.
JB Hi-Fi’s net profit of $160.1 million beat consensus forecasts of about $155 million, buoyed by sales leverage, higher gross margins at JB Hi-Fi stores and good cost control.
Group earnings before interest and tax rose 4.8 per cent to $236.6 million, beating consensus forecasts of about $229 million, as solid sales growth at JB Hi-Fi stores offset margin pressure at The Good Guys amid cooling consumer demand for home appliances.
Revenue in the six months ended December 31 rose 4.2 per cent to $3.84 billion, slightly better than forecasts, as six new stores augmented solid same-store sales growth in Australia and New Zealand.
Comp growth slows
Earnings before interest and taxation at JB Hi-Fi Australia rose 4.5 per cent to $191.9 million, with EBIT margins flat at 7.4 per cent as total sales rose 4.7 per cent to $2.59 billion, same-store sales by 3 per cent and online sales by 21 per cent to $144.4 million.
Same-store sales growth slowed to 2.8 per cent in the December quarter from 3.4 per cent in the first quarter as the chain cycled strong 7.8 per cent comps in the year-ago period. Comps slowed again in January, to 1.5 per cent, compared with 4.8 per cent in January 2018.
Solid demand for communications, games hardware, audio, fitness and connected technology offset weaker sales of software including movies and music.
Gross margins in Australia rose 11 basis points to 22.1 per cent, reflecting a shift to higher margin products, but cost of doing business rose 20 basis points to 13.96 per cent, due to higher sales, marketing and occupancy costs.
NZ in the black
JB Hi-Fi New Zealand returned to profit, earning $NZ1.1 million after just breaking even in the year-ago period, as total sales rose 5.8 per cent to $NZ131.8 million, same-store sales by 12.6 per cent and online sales by 65.4 per cent after the launch of an a new online platform in August 2017.
“We are encouraged by the improved performance in New Zealand, particularly the strong comparable sales growth which is evidence that our offer is resonating with customers,” Mr Murray said.
“We continue to reposition the business, which has included the closure of a loss-making store in July, and in October the appointment of a local managing director, Cherie Kerrison.”
At The Good Guys, EBIT rose 3.9 per cent to $43.7 million as sales rose 2.8 per cent to $1.13 billion, buoyed by two new stores and demand for French-door refrigerators, washing machines, televisions, stick vacuum cleaners and computers.
The Good Guys’ online sales fell 2.4 per cent due to weaker sales on third-party marketplaces including eBay.
However, same-store sales growth accelerated to 1.9 per cent in the second quarter from 1 per cent in the September quarter, taking comps for the half-year up 1.5 per cent, while same-store sales in January rose 0.3 per cent after falling 4.7 per cent in January 2018.
Mr Raymond said full-year guidance appeared conservative, given the first-half growth, but reflected the weakening housing market; and increased competition in appliances between The Good Guys and Harvey Norman.
Analysts believe JB Hi-Fi is faring better than Harvey Norman as falling house prices, rising household living costs and lacklustre consumer sentiment dent demand for big-ticket purchases such as televisions and large appliances.
JB Hi-Fi is the third most shorted stock on the ASX, with 15 per cent of its shares sold short. The stock rose 7 per cent to $24.20 in early trade after falling 14 per cent since the full-year results in August.
JB Hi-Fi lifted its interim dividend by 5¢ to 91¢ a share, payable on March 8.