Shares of JB Hi-Fi Limited (ASX: JBH) soared more than 10% after the market opened this morning after the electronics and white goods retailer smashed revenue and earnings expectations for the full-year ended 30 June 2015.
The results
JB Hi-Fi endured a tough start to the year with comparable sales growth declining 0.7% during the first half. However, a strong second quarter allowed it to carry plenty of momentum into the second half which certainly showed in today's results.
Prior to today's earnings presentation, the company had forecast sales of $3.6 billion and net profit after tax (NPAT) of between $127 million and $131 million. Instead, it reported revenue growth of 4.8% to $3.65 billion thanks to same-store-sales growth of 7.4% in the second half (2.9% for the full-year) and a 6.4% lift in NPAT to $136.5 million, beating analysts' forecasts as well.
Earnings per share (EPS) for the period were $1.379 per share, up 7.4% on the prior year, while the dividend also grew 7.1% for the year with the company announcing a final, fully franked dividend of 31 cents per share.
Pleasingly, the group's gross margin (the percent of total sales revenue the company gets to keep after incurring the costs to purchase those goods or services) continued to improve, rising another 16 basis points to 21.86%, as did its earnings before interest and tax (EBIT) margin which suffered a setback during the first half.
What Happened?
JB Hi-Fi has been in the box-seat position to benefit from Australia's booming property market. Not only does it sell products such as televisions and home entertainment packages, it has also rapidly expanded its "HOME" format store, which sells products such as refrigerators, microwaves and washing machines, amongst other white goods.
The strength of JB Hi-Fi's result can largely be attributed to this trend which also bodes well for rivals such as Harvey Norman Holdings Limited (ASX: HVN) and Dick Smith Holdings Ltd (ASX: DSH). Indeed, JB's management is set to open another five 'Home' format stores and convert another 13 existing stores to Home format this year with the group now expecting sales to grow roughly 5.5% to $3.85 billion in the 2016 financial year.
Share buyback
In addition to the strong results, JB Hi-Fi's shareholders were also treated to the announcement of an on-market share buy-back programme, suggesting there is still plenty of value to be found in the company's stock. The group said it intends to buy back up to 776,610 ordinary shares, representing about 0.8% of the shares on issue worth just over $15 million.
It said: "JB Hi-Fi will only buy-back shares at such times and in such circumstances as it considers beneficial to the efficient capital management of the Company and the buy-back is therefore dependent upon market conditions, volumes and other relevant factors."
Despite today's solid lift, JB Hi-Fi could still be a great pick-up for investors looking to gain some exposure to Australia's retail sector while it is at very least worthy of a position on your long-term watchlist.
