JB Hi-Fi Jumps as Revenue Forecast to Grow Next Year

JB Hi-Fi Ltd. (JBH), Australia’s second- largest electrical goods retailer, climbed the most in more than six months in Sydney trading after saying revenue will increase this year amid a “challenging” retail climate.

JB Hi-Fi climbed 5.75 percent, its biggest gain since Jan. 31, to close at A$9.75 in Sydney. Australia’s S&P/ASX 200 index gained 0.1 percent.

Sales will climb 5.5 percent to A$3.3 billion ($3.5 billion) in the year ending June 2013, and the company plans to add 16 stores to its 168-branch network, Melbourne-based JB Hi- Fi said in a statement today. The plan would give JB Hi-Fi a chance to seize market share as Woolworths Ltd. (WOW) looks to close and sell its Dick Smith electronics chain and Retravision Southern Ltd., a supplier of electrical goods in Australia’s eastern states, entered bankruptcy proceedings in May.

“The strong will get stronger and those less efficient retailers will close,” Chief Executive Officer Terry Smart said on an investor call after the results. “Really this is an opportunity for JB to continue to pick up market share.”

Analysts predict sales of A$3.32 billion and net income of A$100 million this fiscal year, based on the average of 15 estimates compiled by Bloomberg.

The company posted net income of A$104.6 million in the year ended June 30, compared with the A$103.4 million average of 15 analyst estimates. Revenue at stores open for at least 12 months fell about 1 percent, JB Hi-Fi said.

Cash Flow

Operating cash flow increased 96 percent to A$215 million. Most of the benefit came because the financial year ended on a weekend, meaning A$82 million of payments to creditors were delayed until the start of the following week, in the new fiscal year.

“Cash flow realization was a key positive within the result,” Craig Woolford, an analyst at Citigroup Inc., said in a note to clients today. “The company remains a well managed business, but competitive pressure will continue,” Woolford wrote, maintaining his sell recommendation on the stock.

Sales at Harvey Norman Holdings Ltd. (HVN), Australia’s largest retailer of electrical goods, fell 7 percent to A$5.74 billion in the year ended June 30, the company said Aug. 6.

“The market is going to remain challenging,” Smart said. “All we can do is focus on our current strength and continue to innovate and adapt and remain relevant to the consumer.”

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net

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