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Why the JB Hi-Fi share price went up over 11%

Tristan Harrison
JB Hi-Fi

The share price of electronics retailer JB Hi-Fi Limited (ASX: JBH) rose 11.5% today after reporting its half-year result for the six months to December 2019.

That’s a really strong response for a business that has been going for almost 50 years which many people thought had reached its peak a few years ago.

Why did the JB Hi-Fi report sent its share price up so much?

The retailer reported that total sales were up 3.9% to $4 billion.

JB Hi-Fi Australia sales went up 5.1% to $2.72 billion with comparable sales growth of 4.4%, online sales jumped 18.3% to $170.8 million, being 6.3% of total sales. This revenue growth, combined with cost control and lower depreciation, caused earnings growth. Earnings before interest and tax (EBIT) was up 6.5% to $204.5 million with the EBIT margin up 0.1% to 7.5%. In January 2020 the company saw total sales growth of 6.5% with comparable sales growth of 6%.

JB Hi-Fi New Zealand sales grew by 0.8% to NZ$132.8 million with comparable sales up 0.8%. Online sales increased 22.3% to NZ$9.6 million, being 7.3% of total sales. However, gross margins fell 0.16% to 17.4% and costs increase, causing EBIT to come in at NZ$1.1 million. In January 2020 the company saw a total sales decline of 1.6% with a comparable sales decline of 1.6%.

The Good Guys sales rose by 1.5% to $1.15 billion, with comparable sales up 0.6%. Online sales increased by 12.6% to $79.6 million, being 6.9% of total sales. EBIT rose by 14.7% to $50.1 million with the EBIT margin rising by 0.5% to 4.4%. In January 2020 the company saw total sales growth of 1.4% with comparable sales growth of 1.4%.

Before the effects of the new accounting standards, half-year net profit rose by 8.9% to $174.4 million, with earnings per share (EPS) also up 8.9% to 151.8 cents per share.

The interim dividend was increased by 8.8% to $0.99 per share.

JB Hi-Fi increased its total sales expectations to $7.33 billion, with net profit expectations (pre AASB 16) to be in the range of $265 million to $270 million, an increase of 6.1% to 8.1%.

Another impressive result with further growth expected has caused more excitement in this low interest rate environment.

The post Why the JB Hi-Fi share price went up over 11% appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020