JB Hi-Fi working on strategy for NZ business

JB Hi-Fi working on strategy for NZ business after write-down on poor 2017 performance

By Sophie Boot

Aug. 14 (BusinessDesk) - JB Hi-Fi's management is finalising a performance strategy for its New Zealand discount electronics chain after it turned to a loss as sales and margins dropped in the latest financial year.

The New Zealand division posted a $2.7 million loss on an earnings before interest and tax basis in the 12 months ended June 30, from a $1 million ebit profit in 2016, the Melbourne-based company said in a statement to the ASX, where its stock is listed.

JB Hi-Fi has taken a A$15.8 million non-cash impairment on the business "following poor performance in the year", and says it has completed a review of the business and is working on a two-year strategy to improve performance.

Sales fell 0.3 percent to $234 million, though the year-earlier period was boosted by "market-wide demand for third-party prepaid content cards" in the wake of Dick Smith Electronics' liquidation. Gross margins dropped 26 basis points to 18.15 percent, while the cost of doing business increased 156 basis points to 17.89 percent.

The New Zealand arm has 16 stores, making it a small player for the wider group's network of 302 stores. Net profit for the group rose 13 percent to A$172.4 million on a 42 percent increase in sales to A$5.63 billion, ahead of its forecast of $5.58 billion.

The local division's margins lagged behind the larger Australian division business with gross margins of 22.24 percent and a cost of doing business ratio of 14.96 percent.

The board declared a final dividend of 46 Australian cents per share, payable on Sept. 8, meaning a total payout of A$1.18 for the year compared to A$1 in 2016. The ASX-listed shares last traded at A$25.37 and have dropped 9.5 percent this year.

(BusinessDesk)

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