JB Hi-Fi a World Cup winner

JB Hi-Fi aims to open another store in New Zealand this financial year. Photo /  Greg Bowker
JB Hi-Fi aims to open another store in New Zealand this financial year. Photo / Greg Bowker

Electronic goods retailer JB Hi-Fi's New Zealand stores reported their first operating profit in five years as local sales climbed by almost 18 per cent, boosted by fans who bought new televisions to watch last year's Rugby World Cup.

Australia-based JB's 13 stores here reported pre-tax earnings of $3.6 million in the year to June 30, compared with a loss of $1.6 million a year earlier, while sales climbed to $222.2 million from $188.7 million.

But overall the group's net profit fell 4.6 per cent to A$104.6 million, dented by intense competition and subdued retail spending.

Chief executive Terry Smart said most revenue came from electronics sales and had benefited as rugby fans upgraded their televisions before the World Cup kicked off almost a year ago. Comparative store growth was 12 per cent last year.

"It was a good time for retail during that World Cup period. I'm not anticipating seeing the same growth [this year]."

Smart said it was pleasing to finally make a profit.

"We knew we would eventually get there - it just took time to get that critical mass and scale we needed."

Smart said it had been tough in New Zealand but the company continued to increase its market share and was taking business from rivals.

The company also had plans to open one more store - at an undisclosed location - this financial year and up to three more were in the pipeline.

"While it has been tough here in New Zealand it does seem to have turned around."

Margins remained slim and he saw no end in sight to discounting of electronic goods. "It's who we are and what we're about," Smart said.

"While overall retail remains soft and competition remains aggressive, as long as that lasts we'll continue to see our margins remain pretty tight."

JB Hi-Fi grew the gross margin at its New Zealand stores 38 basis points to 17.7 per cent through "increased volumes and improved terms with suppliers", the company said.

Across the group the ASX-listed company said it had managed to contain costs.

"Challenging trading conditions have driven competitors with higher cost bases out of the market," Smart said.

The company's online sales had increased by 77.3 per cent in the past year although they still made up just 1.6 per cent of total sales.

- NZ Herald

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