Dick Smith collapse drives JB Hi-Fi profit surge

Increased computer sales after the closure of competitor Dick Smith has seen JB Hi-Fi post an 11.48% spike in full-year net profit.

The home entertainment retailer enters its 2017 financial year having made $152.18 million in the year prior, topping forecasts of around $146.6 million and JB Hi-Fi’s guidance in May of $143 million to $147 million.

Sales were up 8.3% to $3.95 billion for the year ending June 30, while new stores’ comparable sales grew 5.4%.

Past competitor Dick Smith stopped trading on May 3 after entering administration in January.

JB Hi-Fi chief executive Richard Murray attributes the growth to the collapse of Dick Smith, strong June 2015 sales due to tax time buying and a 10.8% rise in income from hardware and services.

“We anticipate [the closure of Dick Smith] will continue to drive sales growth in the first half of FY17,” said Murray. “However, the impact will moderate as we cycle through their decline and eventual market exit.”

JB Hi-Fi 2016 profit results

In the last financial year JB opened nine new stores in Australia and New Zealand, five of which were JB Hi-Fi Home stores where it sells home and kitchen appliances. Its current total across Australia and New Zealand is 194 stores.

The retailer’s focus on being first to market with technology like smartphones, portables, and audio visual equipment, has seen JB deliver double-digit profit growth – all despite a 5.4% drop in music, movies and games sales.

Online sales continue their ascent, growing 35.8% in 2016 and representing 3% of total sales. JB Hi-Fi gets 1.3 million visitors to its website each week.

Last week JB Hi-Fi was cleared by competition watchdog the ACCC to pursue a bid to acquire appliances chain The Good Guys if its owners do not proceed with an initial public offering. JB said it continues to participate in the sale process but has not made a concrete decision.

Today JB announced it will spend $11.8 million on the on-market buyback following the strong result.

Its 2017 sales target is $4.25 billion, a growth of about 7.6%. JB expects to open another seven stores this financial year.