Australian electronics retailer JB Hi-Fi Ltd has reported a loss in its New Zealand business but is continuing to expand here in the belief that scale will deliver profits.
The company said when reporting annual earnings in Australia that it expected to be profitable in New Zealand during the 2011 financial year.
The company today reported a 26 per cent increase in full-year profit across its group, and said it expected to grow sales by 17 per cent in the current year.
It reported a $NZ4.4 million loss before interest and tax in its New Zealand business.
The company has 10 JB HiFi stores in New Zealand and closed five and rebranded one Hill and Stewart store during the year.
The profit margin in New Zealand was minus 2.6 percent.
It said in a normalised basis the loss was $NZ2.5m.
JB branded store sales in New Zealand grew 34.7 percent to $NZ147m.
Overall sales growth in new Zealand, included a closed Hill and Stewart store was 11.3 percent.
The company opened one new JB HiFi store.
"New Zealand continues to show signs of improved trading from the 10 JB stores as we increase our scale, buying power and grow brand recognition," chief executive Terry Smart said.
"We expect to open three JB stores in New Zealand during dull year 2011," he said.
The new stores are in Sylvia Park in Auckland, Dunedin, and Bayfair in Mount Maunganui.
JB Hi-Fi reported net profit in 2009/10 of $A118.7m ($NZ149m), up from $A94.438m in 2008/09.
JB Hi-Fi aimed to have 210 stores across Australia and New Zealand.
It incurred $A2.5m of costs in closing the Hill and Stewart stores in New Zealand but said they contributed less that 15 per cent to New Zealand turnover.
The now closed Hill and Stewart stores in New Zealand made a loss of circa $A1.5m.