JB Hi-Fi Share Price Down but Profit Guidance Up (ASX:JBH)

It’s been a roller coaster day of trading for JB Hi-Fi Ltd [ASX:JBH].

After opening strongly, the JBH share price is now down 4.55% and falling. A turnaround that probably says more about the state of the market than the retailer.

See, this morning JB Hi-Fi confirmed that they’re on track for another stellar profit. Delivering a 20% net increase over last year’s results.

That is a remarkable feat given our current circumstances. Something that few, if any, retailers will be able to mimic.

To quote their famous slogan:

JB, you’ve done it again.

Sales Boom in Australia, as New Zealand falters

As you’d expect, leading this bumper profit has been surging demand for at-home devices. With JB Hi-Fi in particular reaping the rewards of customers forced to work, school and entertain themselves at home.

Lifting their Australian sales growth from 5.1% in 1H20, to 20% in 2H20.

Part of which can also be attributed to ‘disciplined cost control’. As the company noted in their update.

However, the real surprise was the performance of The Good Guys. Which, just like their JB Hi-Fi business has also had a bumper six months.

In 1H20, The Good Guys managed a modest 1.5% increase in sales growth. The second half blew that figure out of the water, posting a 23.5% increase.

However, it wasn’t all good news for the retailer.

Despite the strength showing in Australia, their New Zealand businesses have suffered. A consequence of the government-enforced lockdown that lasted six weeks.

As such, the company is reviewing the cost of this closure. And as of right now, they’re anticipating an impairment of $25 million will be recorded. The final sum though is pending a review.

Nevertheless, despite this slight hiccup, JB Hi-Fi is likely to report a fantastic profit.

Despite all this good news, the stock is still down for the day. Dragged lower by the wider market pessimism.

For investors though, the long-term outlook is still extremely promising. With profits on the up, shareholders can likely expect a very handsome dividend come reporting season. Which is something few other stocks will be able to boast about.

You need only look at the state of the bank dividends to see how risky income investing can be right now.

But that doesn’t mean there aren’t good yields to be found. JB Hi-Fi is proof of that, and they’re not alone.

We’ve even prepared a report of our five favourite dividend stocks on the market right now. A list of yield-focused investments that could give you the chance to thrive in the post-pandemic market. Get your free copy, right here.


Ryan Clarkson-Ledward,
For The Rum Rebellion

The Rum Rebellion