JB Hi-Fi has beaten expectations with a less-steep drop in profit than analysts were expecting, as consumers kept buying iPhones, audio products and gaming consoles despite rising interest rates.
The group, which also owns The Good Guys home appliance and electronics chain, on Monday reported $9.63 billion in sales for 2022/23, up 4.3 per cent from the year before.
Sales at its flagship JB Hi-Fi stores in Australia were up 5.6 per cent to $6.55 billion, with same-store sales up 4.8 per cent.
The Good Guys sales were up 0.8 per cent to $2.81 billion, while New Zealand JB Hi-Fi sales were up 11.3 per cent to $NZ292.1 million.
The group made $524.6 million in net profit after tax, down 3.7 per cent from last year but better than analysts' consensus expectations of $505 million in profit.
Its cost of doing business rose from 11.4 per cent to 12.1 per cent.
JB Hi-Fi declared a final dividend of $1.15 per share, full-franked, down 24.8 per cent from a year ago. For the year, the retailer's total dividend was $3.12 per share, down from $3.16 a year ago.
Contributors to sales growth included the strong iPhone 13 launch in the first half and demand for headphones, soundbars and next-generation game consoles, group CEO Terry Smart said.
A return to travelling also boosted JB Hi-Fi's airport sales, particularly in audio. Software sales were up 2.4 per cent, driven by growth in games and music although partially offset by a drop in movie DVDs.
With physical stores reopened, online sales were down 21 per cent to $940 million, making up 14.4 per cent of all sales.
But compared to 2018/19, online sales were up 264.3 per cent and JB Hi-Fi is now using Uber to offer deliveries in about an hour.
Sales for the new financial year have got off to a slow start compared to last year, when retailers were still benefiting from pent-up demand from the COVID-19 lockdowns.
Compared to July 2022, JB Hi-Fi Australia's sales last month were down 1.8 per cent, with same-store sales down 2.9 per cent.
Sales at the Good Guys were down 12 per cent and JB Hi-Fi New Zealand sales slipped 10 per cent.
While the overall drop in sales was within expectations, Mr Smart admitted The Good Guys was "down a little bit more than we'd hoped".
The Good Guys' sales of laundry appliances and heating products last month fell compared to July 2022, when wet weather across several states changed sales patterns, Mr Smart said.
He said years of consistent and always-on promotional activity had earned JB Hi-Fi's brands a reputation that were even more relevant given the economy.
"We're a value retailer or a discount retailer and that will be resonating much more strongly in today's markets with customers,'' he said.
But eToro market analyst Josh Gilbert wasn't as sanguine, noting consumers' confidence was at decades lows and they have been cutting back on spending as the heightened cost of living erodes household budgets.
"With the lag of the RBA’s tightening cycle yet to be fully felt, and unemployment set to rise over the months ahead, consumers aren’t likely to be splashing out on high-ticketed items, meaning the months ahead will be an uphill battle for JB Hi-Fi," he said.
E&P Capital retail analyst Phillip Kimber said while JB Hi-Fi's $525 million net profit was above consensus expectations of $505 million, he noted the weakening sales momentum in July.
JBH shares finished up 2.8 per cent to $48.51, their highest level since February, on a generally down day for the market.
