JB Hi-Fi First Half Earnings Expected to Fall 5pc

Submitted by Share Market Writer on 16 December, 2011 - 13:51

JB Hi-Fi (JBH) reported last night that it expects its half year earnings to decline by 5 per cent as its shares dropped by $1.96 or 13.1 per cent to $13.04 in the morning trade. The electronics retailer surprised the market by experiencing a downgrade on what is supposed to be the busiest time of the year.

Contrary to the expectation of generating more profit from opening new stores, the situation seemed to worsen as the sales decline 3.5 per cent in the first quarter and 1.8 per cent lower in the first five months. Even though the sales are still in line with the guidance, JB Hi-Fi's profit fell by 20 to 25 per cent due to steep price deflation.

"Sales in the second quarter have improved, but unfortunately not enough to counter the impact of the first-quarter decline in sales and margin -- driven in large measure by a high level of discounting in the market," said JB Hi-Fi Chief Executive Terry Smart yesterday. "As a result of these factors, we expect earnings before interest and tax for the half year to be around 5 per cent below our first half last year, subject to Christmas trading performance being in line with recent months' trends."

As Smart mentions positive sales trends in October and November, he hopes that growth in computer and information technology categories and more new store openings would give the company a better performance on the second half.

City Index Chief Market Analyst Peter Esho said that the electronics retailer is "trying to put a brave face on what looks like being in a very tough year."

JB Hi-Fi shares fell 1.6 per cent to $15.