JB Hi-Fi sales down 6pc - profits up

NZ sales are down at JB Hi-FI, but profits are up. Photo / Greg Bowker

Australian discount consumer electronics chain JB Hi-Fi's New Zealand sales fell 6 per cent in the first half from a year-earlier result boosted by the 2011 Rugby World Cup, though it still managed to lift profit.

Sales fell to $117.5 million in the six months ended December 31 from $124.9 million a year earlier, the ASX-listed company said in a statement. The fall in sales came from a boost in revenue in 2011 when New Zealand hosted the Rugby World Cup and reaped the benefits from an influx of tourists and keen sports supporters looking for gadgets to watch the game.

See the company's investor presentation here.

Even with the fall in sales, the New Zealand unit lifted pre-tax earnings 17 per cent to $2.6 million, squeezing more from its customers as improved productivity helped reduce the retailer's costs of production.

JB Hi-Fi's New Zealand stores reported their maiden operating profit last year, lifting sales 18 per cent in the stand-out performance for the Victorian based company.

The group reported a 3 per cent increase in first-half profit to A$82.1 million, or 83 Australian cents per share, on a 2.3 per cent rise in sales to A$1.82 billion. It expects annual sales of A$3.25 billion and profit between A$108 million and $112 million.

"In the second half of FY12 we saw aggressive discounting across the market, which while driving sales, did impact gross margin," chief executive Terry Smart said in a statement. "As we cycle this period we anticipate sales growth may be more challenging, but this should be offset by a relatively stable gross margin environment."

The retailer has seen a strong start to the year, with total sales growth of 12 per cent in January, and an improved gross margin from a year earlier, Smart said.

The board declared an interim dividend of 50 Australian cents per share with a Feb. 21 record date, and payable on March 8.

The shares jumped 13 per cent to A$12.49, and the stock is rated an average 'hold', based on 15 analyst recommendations compiled by Reuters with a median target price of A$10.50.