It seems that even couch potatoes can have too much of a good thing, with sales of flat screen televisions waning.
But that was not enough to stop JB Hi-Fi lifting its first half profit by three per cent, resulting in a 17 per cent surge in its share price.
The company reported that it made a $82 million net profit for the six months to December 31, up from $79.6 million the previous corresponding period.
JB Hi-Fi expects its full year net profit to be in the range of $108 million to $112 million, up from the previous year $104.6 million.
Total sales grew by 2.3 per cent due to the retailer opening 11 new stores during the half.
The retailer is also planning to open a further four stores during the second half of 2012/12.
But on a comparable sales basis, sales were down 3.5 per cent on the first half of 2011/12.
Chief executive Terry Smart said the biggest contributing factor to the fall in comparable sales was a decline in the number of televisions sold.
He said recent years of rapidly declining prices for flat screen televisions and the rollout of digital television had meant that customers had bought numerous sets for their homes.
Mr Smith said shoppers were now starting to only buy new televisions when they needed replacing or if they wanted to upgrade.
However, he said JB Hi Fi was also increasing its market share in televisions.
“The main driver of that decline is that we’re hitting saturation point in numbers,” he said.
“What you’ve seen with televisions is that we’ve seen prices stabilise and now we’re seeing bigger screens come into play and people are somewhat trading up into the bigger screens and as a result we’re seeing a higher price come through.”
Mr Smart said during the second half of 2011/12 the company had aggressively discounted its products which had impacted its margins.
He said this would not be repeated during this financial year which while it may impact on sales growth would be offset by more stable margins.
“What we’re now seeing is that while the market is still very aggressive and while we’re not saying we’re not discounting we’re just not seeing that heavy discounting that we were seeing last year,” he said.
Mr Smart said calendar year 2013 was already off to a good start with comparable sales up 4.2 per cent on January 2012.
He said while February sales had also been pleasing it was a bit too early to make any predictions for the month.
JB Hi-Fi shares soared after the release of its results, closing 17.08 per cent, or $1.88, higher at $12.89.
Morningstar analyst Tim Montague-Jones said the shares surged because 20 per cent of the stock had been short traded as profits and sales were expected to fall.
“The underlying result was slightly above our expectations,” he said.
“We were expecting $101 million (net profit) for the full year,” he said.
