ASX 200: JB Hi-Fi 1H 2023 earnings preview

When will JB Hi-Fi report its latest earnings?

JB Hi-Fi is scheduled to report its 1H2023 earnings on Monday, February 13th, 2023 AEST.

What should traders look out for?

JB Hi-Fi Limited is a consumer electronics and home appliance retail company with over 300 stores across Australia and New Zealand. It is one of 132 companies that sits under the ASX Consumer Discretionary Sector.

In a trading update in mid-January, JB Hi-Fi reported that sales growth was up 8.6% in the December half to $5.3 billion, driven by elevated customer demand for consumer electronics and household appliances.

Robust sales growth and improved gross margins resulted in strong EBIT growth of 14.0% to $479.2 million. Online sales for the company were $752m, representing 14.2% of total sales, an increase of 10.8% on the prior corresponding period.

At a division level, Good Guys delivered $133m in 1H2023 EBIT (+9.8%) YoY. JB Hi-Fi Australia produced a record 1H EBIT with $341m (+16.7%) YoY.

Group CEO, Terry Smart, said, “We are pleased to report record sales and earnings for HY23 as trading conditions started to normalise following two years of Covid-related disruptions. Our relentless focus on providing the best value and high levels of customer service every day, both in-store and online, continues to resonate with our customers.”

Whether the growth is sustainable is another question.

Headline inflation at 7.8% is at its highest level in Australia since 1990. The RBA has raised interest rates by 325 bp since last May. On top of this, household savings rates have normalised from their Covid elevated levels, and housing prices continue to fall.

As noted by the RBA, some households “are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living.”

Evidence that consumer caution is rising, a 3.9% fall in retail sales in December, exceeding expectations for a -0.4 fall. While some of the fall was attributable to payback in sectors previously boosted by Black Friday sales, it appears a consumer slowdown has begun.

When this occurs, the first purchases consumers usually cut back on are discretionary purchases.

JB Hi-Fi earnings – what to expect

JB Hi-Fi Net Profit after Tax

JB Hi-Fi shares technical analysis

The share price of JB Hi-Fi rallied over 30% from its October $37.52 low to the mid-January $49.72 high. The mid-January high coincided with the delivery of the trading update outlined above.

Since that point, the share price of JB Hi-Fi has edged lower, picking up the speed to the downside after the RBA raised rates again in early February and warned of more to come.

Interim support is viewed at $46, which needs to hold to keep the uptrend intact. Aware that if the share price were to see a sustained break below $46.00, it would warn that a deeper pullback initially towards support at $43.50 is underway with scope to $40.00.

JB Hi-Fi daily chart

Summary

JB Hi-Fi is scheduled to report its 1H2023 earnings on Monday, February 13th, 2023.

While the company will likely confirm the strong numbers outlined above, there is reason to be cautious about the outlook as cost of living and the macro headwinds outlined above intensify in the second half of 2023.