Shareholders of JB Hi-Fi Limited (ASX: JBH) have been given their first glimpse into the retailer's trading performance so far in the 2016 financial year with the group holding its Annual General Meeting this morning.
Indeed, results have been somewhat mixed from the retailers so far for the financial year, and investors may have been nervous ahead of JB Hi-Fi's own results announcement.
While Harvey Norman Holdings Limited (ASX: HVN) recorded same-store sales growth of 7.1% locally during the first quarter, shares of Dick Smith Holdings Ltd (ASX: DSH) plummeted on Wednesday after it provided a major profit downgrade.
Woolworths Limited (ASX: WOW) is also falling heavily today, down 8.6%, on a profit downgrade.
In his address to the market however, JB Hi-Fi's CEO, Richard Murray, said that sales were up 5.3% so far in the financial year with comparable sales up 3.7%. He maintained his guidance of roughly $3.85 billion in sales for the full-year, despite the competitive marketplace in the lead up to the Christmas period.
Aside from growing sales however, there are a number of other factors which shareholders can get excited about.
JB Hi-Fi is one of Australia's leading specialty retailers due to its low-cost operations, solid margins and its ability to constantly innovate to ensure it remains relevant to customers. This has been demonstrated most recently by its push into the white goods market by rolling out its JB Hi-Fi HOME network.
The company had 43 of these stores throughout Australia and New Zealand as at 30 June 2015, but is targeting 75 stores in the coming years. This will, in part, involve converting a number of existing JB Hi-Fi outlets while the company will also begin to introduce small appliances to various traditional stores. These stores will be reconfigured with 22 planned for the first half of FY16.
Should you buy?
Although there are certainly risks that come with an investment in the retail sector, JB Hi-Fi still appears to be a reasonable buy today, in my opinion.
The company continues to improve sales and margins with more dollars dropping straight to the bottom line, while there are reasonable growth prospects – especially with the continued roll-out of the HOME stores. As an addition, the company offers a 5% fully franked dividend yield, which is great in this low interest rate environment.
