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JB Hi-Fi's earnings slump in NZ

NZN 12/02/2017 Paul McBeth

ASX-listed discount electronics good retailer JB Hi-Fi's management is keeping an eye on the New Zealand business after first-half earnings halved on this side of the Tasman as rising costs eroded the firm's margins.

New Zealand earnings before interest and tax fell to $1 million in the six months ended December 31 from $2m a year earlier, the Melbourne-based company said on Monday.

Sales slipped 1.7 per cent to $125.1m, although the year-earlier period was boosted by "market-wide demand for third-party prepaid content cards" in the wake of Dick Smith Electronics' liquidation.

"The overall performance in New Zealand is an ongoing focus for the management team," JB Hi-Fi said.

Government figures show New Zealanders spent $3.1 billion on electrical and electronic goods retailing in the 2016 March year, up from $2.81b a year earlier.

The New Zealand arm has 16 stores, one of which was opened in the period, making it a small player for the wider group's network of 302 stores. Net profit for the group rose 16 per cent to $A110.4m ($NZ118m) on a 24 per cent increase in sales to $A2.62b, which included about a month's contribution from JB Hi-Fi's recently acquired The Good Guys division.

The local division's margins lagged behind the larger Australian division business with gross margins of 22.22 per cent and a cost of doing business ratio of 13.93 per cent.

The ASX-listed shares last traded at $A28.47 and have gained 32 per cent over the past 12 months.

JB Hi-Fi forecast annual sales of $A5.58b, of which $A4.33b will come from the JB division and $A1.25b from Good Guys.

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