How does JB Hi-Fi keep winning a lost war?

Here's how the JB Hi-Fi Limited (ASX: JBH) share price keeps proving a winner in the midst of the 'retail apocalypse'.

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CDs, records, games and DVDs… it's not what you'd call a recipe for retailing success in the 21st century. Yet that's what retail king JB Hi-Fi Limited (ASX: JBH) is best known for selling (it's even in the name!).

Yesterday, JB Hi-Fi reported its results for the six months to December 2019. And it shocked the market, to say the least.

Total sales rose 3.9% (including an 18.3% jump in Australian online sales), which resulted in the company reporting earnings growth of 6.5% and earnings-per-share growth of 8.9%. On the back of these numbers, JB also increased its dividend by 8.8% to 99 cents per share.

As a result, JB Hi-Fi shares went ballistic yesterday, jumping from Friday's close of $40.16 to $43.70 upon open and then all the way up to $45.65 – a total jump of 13.67% trough-to-peak and a new all-time high. The JB Hi-Fi share price has since settled somewhat and is trading at $43.33 at the time of writing.

Looking at the fortunes of JB's fellow brick-and-mortar store chains like Myer Holdings Ltd (ASX: MYR), Reject Shop Ltd (ASX: TRS) and the bevvy of iconic Aussie names like Haris Scarfe and Roger David that have hit the wall recently, it's confounding to see how JB is winning so convincingly in a war against online retailing that seems to be lost.

How does JB Hi-fi keep winning?

It's worth noting that JB no longer focuses on things like CDs and DVDs as a core part of its business. The company saw the writing on the wall years ago and has since diversified into TVs, white goods (like fridges and washing machines), tech accessories, mobile phones, computers and appliances.

It appears this foresight has paid dividends to the company. JB listed its strongest performing segments as "Communications, Audio, Computers, Visual and Accessories" for its JB Hi-Fi stores and "Dishwashers, Floorcare, Cooking, Communications and Computers" for its Good Guys chain.

All of these segments represent goods where consumers are still far more likely to want an 'in-store' experience. JB prides itself on its staff, its branding and customer assistance. It's this combination that keeps JB winning in a sector defined by losers these days.

Foolish takeaway

I love JB as a company (and incidentally as a customer) and would probably invest if I had to pick an ASX retailer to add to my portfolio. However, I do think the share price might have run ahead of itself after yesterday and so I'll be waiting for a pull-back before picking up some JB Hi-Fi shares.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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