JB Hi-Fi attributes $65M profit to computer sales

JB Hi-Fi has told CRN that its full year net profit of $65.1 million can be partly attributed to a sales boom for JB’s IT section – which has been running since June 2007.

JB Hi-Fi’s CEO, Richard Uechtritz, told CRN that sales in computers have provided JB with a strong growth for the end of its financial year results. According Uechtritz IT is a strong industry and a growing one for the retailer.

“[Computer sales] grows bigger as the months move on and the computer business is a very happy one for JB. We are relatively new – having finished rolling out computer sales in our major stores June 2007. However in our first full year, despite a number of stores still making room to sell IT, I can say that computer sales has strongly contributed to sales profit,” said Uechtritz.

According to Uechtritz consumers only go to local IT retailers if they are intending to buy a new computer or laptop. However customers frequent JB Hi-Fi for products such as DVD or CDs.

“Retail is about getting people into stores. We sell everything from software, music to DVD home entertainment and regular customers that come into the shop walk straight our computer section, so in the back of their minds they know to consider going to JB for their IT needs,” he said.

Uechtritz claimed smaller operators only sell computers and only land sales for these items. “Our customers shop at JB for months on end and make us their retailer of choice for computer purchases.”

Despite the drop in consumer confidence in spending, rising interest rates and petrol prices, people are still willing to spend money on consumer electronics and entertainment. This is reflected in JB’s full year net profit of $65.1 million, up 61 percent on the prior year, which was $40.4 million.

Consolidated comparable store growth was 15.3 percent and sales in product categories were solid with games, computers movies and visual driving store sales growth. Gross margin in Australia was 22 percent and at the same level as last year.

“Unemployment levels are steady and people aren’t losing their jobs. They might not be able to afford a holiday or petrol for a long trip – so they might want to spend the money on entertainment for the home,” said Uechtritz.

He claimed that people were still earning money and they enjoy buying things that make them feel good, like a new computer, LCD plasma TV or a new phone. “These things are also used to keep people in touch with the world and is integral part of a lifestyle,” Uechtritz.

“JB is doing well because we only deal in IT and home entertainment. We don’t have to deal with furniture and white goods (which may be products consumers are forgoing). We are also located in shopping centres and not destination only areas,” he said.

According Uechtritz JB had 93 stores in Australia and 12 stores in New Zealand. The company will open another 24 stores in Financial Year (FY) 2009. “We have the all important Christmas trading period ahead of us, we maintain our previous sales guidance in FY09 of circa $2.36 billion or 28 percent increase on FY08.”

Despite the positive growth, rumours are circulating in the Australian media that mass merchant retail chain, Woolworths is aggressively pursuing an acquisition of JB Hi-Fi –which will create one of the largest CE chains in Australia.