Electronics retailer JB Hi-Fi said annual earnings came in ahead of guidance and forecast strong sales growth in 2016 as it benefits from Australia's buoyant housing market, sending its shares surging as much as 11 percent.
Electronics retailer JB Hi-Fi said annual earnings came in ahead of guidance and forecast strong sales growth in 2016 as it benefits from Australia’s buoyant housing market, sending its shares surging as much as 11 percent.
Home prices across Australia’s capital cities have jumped over the past several months on robust demand, to the point that Reserve Bank of Australia Governor Glenn Stevens has called the Sydney market “crazy”.
The rise in values has bolstered household wealth, encouraging consumers to splash out on electrical goods and other home appliances – a trend that is also expected to benefit JB Hi-Fi’s rivals Harvey Norman Holdings Limited and Dick Smith Holdings Ltd.
The company reported a 6.3 percent rise in full-year net profit to A$136.5 million ($100 million), above guidance issued in February of A$127-131 million.
Sales rose 4.8 percent to A$3.65 billion, with demand for appliances and mobile phones offsetting weaknesses in software and tablets, and the company said it expects sales growth next year of 5.4 percent.
JB Hi-Fi has benefited from a shift away from just audio-visual electronics, rolling out “Home” format stores to sell refrigerators, washing machines and other white goods as it seeks to grab a larger slice of Australia’s A$4.6 billion home appliances market.
It has 43 “Home” format stores and is aiming to lift that to 75 across Australia and New Zealand.
Also boosted by plans for a A$15.2 million share buyback, equivalent to 0.8 percent of outstanding stock, JB Hi-Fi shares climbed 8.6 percent to stand at A$21.30 at midday.
The stock has risen from a low of A$7.79 in June 2012, shortly before the country’s property market began to heat up.
The company is also introducing small appliances, a move that follows an announcement by Dick Smith last week that it was bringing small appliances into 100 of its stores under a “ConnectedHome” sub-brand.
($1 = 1.3532 Australian dollars)