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JB Hi-Fi Limited FY19 Earnings Briefing

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

JB Hi-Fi Ltd (ASX:JBH) announced their full-year results today, revealing gross profit growth of 3.9% amidst a challenging retail environment and slowing consumer confidence. The Australian JB Hi-Fi business came out by far the strongest of their three main business units, with JB Hi-Fi NZ and the Good Guys experiencing modest revenue declines. Gross profit expansion is of 88bps in the second half, on the back of recent initiatives that were put in place over the past few months, was the main driver of the increase in profits.




The company has paid out 142.0 cents of dividends for the financial year, which amounts to a sustainable 65% payout ratio. The board declared that they believed this figure balanced future growth prospects and profit distribution, implying that they are looking to keep this payout ratio for the longer term.

The announcement revealed some positive news about the company’s balance sheet, with net assets increasing 10%. They have also restructured their debt facilities into multiple terms and paid off $110m in debt. Additionally, they increased their trade finance facility by $30m but did so alongside a reduction in the company’s overdraft facilities by $30m that offset the increase. The group’s $59.3m in capex is already beginning to show results in the form of improving margins, providing the business with the competitive advantage that it needs to keep growing into a contracting retail sector.

One of the risks the group identified is the erosion of its reputation for price leadership in the market. JB Hi-Fi’s management team is aiming to combat the risk by consistently monitoring competitor pricing, while also maintaining a close watch on customer complaints to make sure they are recognised as a good place to shop. Online competition is also a major risk for both JB Hi-Fi and the Good Guys, which is why management continues to invest aggressively in making sure they contain the costs of doing business, whilst being exposed to the rapidly growing online segment of the market.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.


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