It is hardly a like-for-like comparison when looking at JB HiFi’s
(ASX:JBH) Australian and New Zealand results for the September 2022 quarter against those from a year earlier – circumstantially, the two are worlds apart.
And yet that what most business media and some early analysts did on Thursday when they trumpeted that NZ sales by the consumer electronics and white-goods giant had done better in than in Australia.
That’s because of the tougher lockdowns in NZ – especially in Auckland a year ago – compared to Australia, where the lockdowns were harshest in Sydney, Melbourne, Adelaide but not in much of Queensland, WA and regional NSW.
The company said total sales for JB Hi-Fi Australia rose 14.6% in the first quarter of fiscal 2023, from a year ago.
Sales for the NZ operations jumped 27.7% in the same period while white-goods heavy chain The Good Guys saw a 12.3% sales rise.
The comparative quarters tell real the story about the size of the rises – while the 14.6% rise for JBH Australia looked huge, it was from a 7.5% slide for the first quarter of 2021-22 and the 14.2% rise in comparable sales was likewise off a negative comparison of 7.9%.
The NZ rise of more than 27% was from a fall of 6.4% and the performance by the Good Guys of a rise of 12.3% was from a fall of 5.6% a year ago.
The update was delivered to yesterday’s annual meeting where JBH confirmed the news contained in the annual results, that the company was thinking of shaking up its weakly performing NZ business and had appointed an experienced Kiwi executive to oversee the change.
The meeting was told yesterday “The Group recently completed a strategic review of the JB Hi-Fi New Zealand business and believes there is a significant opportunity to grow and expand the business.
“Over the next three years, the Group will be investing in improving the JB Hi-Fi New Zealand customer offer, refreshing the store network, opening new stores and upgrading its online platform.
“To lead the repositioning and growth of the New Zealand business, the Group has appointed Tim Edwards as Managing Director of JB Hi-Fi New Zealand. Tim previously worked at The Warehouse Group for more than a decade, including seven years as CEO of Noel Leeming, and brings deep local experience and long- standing relationships, combined with a passion for retail.
That is also an admission that apart from a buyback, it has nowhere else to invest its solid cash flows and earnings. It will have to be careful it doesn’t overcapitalise the much smaller NZ operations in any revamp.
As for guidance for the rest of the 2022-23 financial year – zilch except these anodyne remarks from CEO Terry Smart (who is in his second term as the boss of the country’s biggest consumer electricals group).
He told the meeting “We are pleased with the start to FY23, with continued sales momentum and strong sales growth rates over a three-year period.”
“In an uncertain retail environment and with household budgets under increasing pressure, customers gravitate to trusted value-driven retailers. Our ongoing strategy of providing customers with the best value and outstanding service every day, will ensure our brands continue to deliver for our customers and remain a destination of choice into the future. “
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Shareholders in Super Retail Group
(ASX:SUL) heard a similar story at Thursday’s annual meeting – strong September quarter sales growth from an artificially low base in the corresponding period a year ago, where sales fell because of the lockdowns.
The company said all four of its brands – Super Cheap, Rebel, BCF and Macpac – posted same-store sales growth in the first quarter with outdoor wear brand Macpac surging 76% following wet weather in Australia (that’s a lot rainproofs and wellies!).
Same-store sales at key brands Supercheap Auto and Rebel gained 23% and 20%, respectively, in the first 16 weeks of the 2023 fiscal year, while BCF was just 4% higher.
Online sales represent 10% of group sales to date sales, a year ago they were 30% and the difference represents the return of people to shopping in bricks and mortar after being confined for so long.
CEO Anthony Heraghty took the sensible route by cautioning shareholders against getting too upbeat over the 20% rise in first quarter sales.
He told shareholders that given lockdowns a year ago investors shouldn’t be extrapolating this growth over the rest of the year or even first half (though the December quarter will see something of a repeat simply because of the lockdowns a year ago).
He said the first half result will be highly dependent on trading in the peak Christmas holiday period, and he does expect higher interest rates will impact consumer spending.
“While current trading remains strong, the group expects higher mortgage rates and increased cost of living expenses will begin to impact consumer spending,” he told shareholders.
“The value proposition of the group’s brands, our large active club member base and the resilience of our key auto and sports categories mean the group is well positioned for more challenging retail trading conditions ahead.”
Investors though appreciation the caution from the company about the comparisons and sent the shares up 2.6% to $9.99.
Mr Heraghty said Supercheap has continued to trade well, supported by its store refurbishment program, with auto maintenance the best performing category. Sales at sport chain Rebel were driven by a recovery in foot traffic to malls, improved stock availability from key global sports brands and an uplift in licensed sales during the AFL and NRL finals season.
“BCF has maintained sales growth momentum above pre-COVID-19 levels,” he added.
“Year to date performance has been underpinned by growth in camping and apparel sales, supported by the success of new strategic brands including Yeti and Darche. BCF remains on track to open its brand-new superstore in Townsville in November.”
Mr Heraghty said while Macpac’s year-to-date performance was strong in Australia, New Zealand suffered in the first quarter due to a lack of staff because of COVID-19 and a slow recovery in tourism.
Group gross margin percentage in the first quarter was in line with a year ago.
Chair Sally Pitkin told the meeting that, after 12 years on the board, she would retire at the end of the current three-year term in 2024.
SUL has opened 21 new stores in the past 12 months, a net addition of 18, taking total stores to 716 across Australia and New Zealand.
The company is also refurbishing the network and upgrading new formats like Rebel’s 11 RCX stores which are larger format that showcase key global brands.
The company plans to open 30 more stores across both countries.
