Australian's love of technology drives up JB Hi-Fi's profits

Australia’s love affair with technology continues to grow, with technology retail giant JB Hi-Fi expecting a bumper close to the financial year.

The company expects to exceed its guidance on profit expectations for the full financial year in 2008, with current profits for the year ending 30 June 2008 already at $64 million.

The half yearly profit guidance is a 58 percent increase on the prior year’s net
profit after tax of $40.4 million (previous guidance was $57 to $60 million).

According to Richard Uechtritz, chief executive officer at JB Hi-Fi, sales expectations continue to be in line with previous guidance of $1.8 billion, a 40 percent increase on the prior year and comparable sales growth for the 11 months ended 31 May 2008, was 15.8 percent.

“This strong forecast result will be achieved after absorbing the cost of a substantial first year investment in new stores in New Zealand and the rollout of telecommunications in Australia, both of which should be positive contributors in financial year 2009,” said Uechtritz.

In a statement to the ASX, JB Hi-Fi claimed gross margins in Australia will be similar to financial year 2007, despite the rapid growth of new lower margin categories such as games and computers.

“Our cost of business continues to reduce which will give us earnings before interest and tax margin over the previous financial year,” said the retailer.

JB Hi-Fi will open 24 new stores in financial year 2009. These new stores combined with the 33 stores opened in the last two years will continue to drive growth, the retailer claimed. Uechtritz said the company expects to have sales of $2.35 billion for financial year 2009, an increase of 30 percent on 2008.