JB Hi-Fi changes tune: results mention ‘Commercial’ business, not Solutions

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JB Hi-Fi changes tune: results mention ‘Commercial’ business, not Solutions

Strong numbers and a hint of a Good Guys/Telstra tie-up.

Gravity defying electronics retailer JB Hi-Fi has posted strong half-year results but again remained largely quiet on its intentions to enter the business market.

The retail giant operates “Solutions” business that targets B2B sales and services. The company’s results and regulatory filings nearly always offer some insight into the performance of the Solutions business, but does so in very guarded language that says not much more than it grew and remains on track to hit a long-defined target of $500 million in annual sales.

In half-yearly results posted Monday, the company makes a small change: it has dropped the $500m sales target and now refers to the team as “The Commercial business”.

“The Commercial business recorded strong sales growth as we continue to expand our product and service offering” is all investors have been told.

The path of retailers adding IT services to their core offering is not unexplored, with with Wesfarmers-owned Officeworks looking to boost its offer through the acquisition of Geeks2U last year.

Wesfarmers stablemate Bunnings has also set out plans to hook customers up with tradies for installations and assembly as it also moves into the crowded smart home market.

Across the JB Hi-Fi group – comprising JB Hi-Fi, The Good Guys and JB Hi-Fi Solutions – sales for the half-year ended 31 December 2019 rose by 3.9 percent to from $4.0 billion. Net profit after tax hit $174.4m, up 8.9 percent, while earnings per share and dividends also climbed.

At JB Hi-Fi, online sales hit 6.3 percent of total sales, or $170.8 million.

There were some notes of caution in the results announcement (pdf), which says consumers prefer to buy when goods are on sale and that the company sees growth in low-margin products.

Another interesting hint comes in the results presentation (pdf), which on page 20 says a FY20 “focus area” for The Good Guys is “National rollout of Telco services in partnership with Telstra”.

iTnews has asked JB Hi-Fi to explain that point, because The Good Guys already promotes Telstra mobile plans. The language used hints at a mobile virtual network operator (MVNO) play that could see The Good Guys use Telstra’s network. If that comes to pass, it will hardly be unique: Aldi, Boost, and Woolworths all use Telstra’s network for their MVNO services.

Guidance for the full financial year is for group sales of ~$7.33 billion, with net profit after tax of between $265 million and $270 million, a six to eight percent jump from FY 18/19.

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