JB Hi-Fi delivers (again)
JB Hi-Fi Limited (ASX:JBH) has again outperformed market expectations with its first-half of 2025 (1H25) earnings results. JB Hi-Fi continues to demonstrate its knack for navigating economic uncertainty while driving shareholder returns through impressive cash generation and dividends.
In addition to excellent management, the company’s performance is also aided by the constant stream of technological advancements present in the categories in which JB Hi-Fi operates. Short replacement cycles for TV, mobile phones and laptops, for example, enable management to leverage or multiply their execution skills. Notwithstanding the possibility of changes in management team members, one would expect the combination of skill and the short product replacement cycles to continue benefiting JB Hi-Fi and offsetting the slow and limited new store growth.
First-half of 2025 performance
JB Hi-Fi reported earnings before interest and tax (EBIT) of $419.9 million, surpassing consensus estimates of $409 million thanks to better-than-expected performances from JB Hi-Fi and The Good Guys.
It appears robust trading has continued into January, with JB Hi-Fi Australia recording like-for-like sales up 7.1 per cent (versus consensus expectations for the second year-half of 4.3 per cent) and The Good Guys like-for-likes up 5.9 per cent (versus consensus second year-half expectations of 3.5 per cent). In other words, early second-half trading is tracking well ahead of expectations for the second half.
Total group sales for the period came in at $5.67 billion, reflecting a 9.8 per cent year-over-year increase and comfortably beating consensus estimates of $5.55 billion.
Net profit after tax (NPAT) rose 8.0 per cent to $285.4 million, slightly ahead of market forecasts of $279 million. This robust growth was further supported by strong cash generation, with a net cash position of $555 million and operating cash flow of $656 million, beating expectations by a significant margin.
Key divisional highlights
JB Hi-Fi Australia
Sales: $3.88 billion, up 7.2 per cent year-on-year
EBIT: $316.5 million, up 7.5 per cent year-on-year
Gross margin: 21.8 per cent (slightly below 22.0 per cent in its first-half of 2024 (1H24) results due to product mix and competition)
Comparable sales growth: +7.2 per cent, driven by a strong second quarter (+8.8 per cent)
JB Hi-Fi Australia remains the company’s growth engine, supported by a recovery in consumer electronics and continued momentum in home entertainment categories.
The Good Guys
Sales: $1.52 billion, up 9.2 per cent year-on-year
EBIT: $99.5 million, up 7.5 per cent year-on-year
Gross margin: 23.1 per cent (slightly lower than 23.4 per cent in 1H24)
Comparable sales growth: +8.8 per cent, driven by an exceptional second quarter of 2025 performance (+11.9 per cent)
The Good Guys benefited from strong demand in large appliances and ongoing promotions, contributing to sustained growth despite the competitive landscape.
JB Hi-Fi New Zealand
Sales: NZ$202.5 million, up 20.0 per cent (+17.9 per cent) year-on-year
Comparable sales growth: +6.9 per cent, split 2.7 per cent in quarter one and 9.4 per cent in quarter two
EBIT: NZ$2.2 million, reflecting significant improvement from the previous period
JB Hi-Fi New Zealand capitalised on improving macroeconomic conditions and enhanced product offerings, delivering double-digit growth in the second quarter, of 9.4 per cent.
Cash flow and dividend growth
Cash generation remained a standout feature of the first-half of 2025 results, with operating cash flow of $656 million, representing a 135 per cent conversion rate. This strong cash performance allowed the company to maintain a solid net cash balance of $555 million before lease liabilities. Capital expenditure for the half, totalled $39 million, in line with expectations.
JB Hi-Fi announced an interim dividend of $1.71 per share, slightly ahead of market estimates and in line with its consistent track record of returning value to shareholders. The dividend underscores the company’s ongoing confidence in its business model and growth trajectory.
January 2025 trading update: strong start to the second half
January trading data further highlights JB Hi-Fi’s resilience in the retail sector, with comparable sales growth across all brands exceeding expectations:
JB Hi-Fi Australia: +7.1 per cent
The Good Guys: +5.9 per cent
JB Hi-Fi New Zealand: +10.0 per cent
These figures suggest continued strength in JB Hi-Fi’s competitive position, particularly considering the muted consumer landscape.
What’s driving the growth?
JB Hi-Fi’s success in 1H25 can be attributed to its strategic product mix. Despite slight margin pressure due to competition, the company’s ability to balance product offerings across categories has driven consistent sales growth.
Cost management has also played a part with JB Hi-Fi Australia’s cost of doing business as a percentage of sales (cost of doing business sales) declining, reflecting operational efficiency and disciplined expense management.
The company is benefiting from scale and associated operating leverage as stronger sales are driving lower fixed costs as a percentage of revenue.
Finally, JB Hi-Fi’s market leadership and status as the go-to retailer for electronics and appliances can be attributed to its investment in brand and reputation, which has produced high customer loyalty.
Valuation
JB Hi-Fi remains a very high-quality company winning market share and benefitting from short product replacement cycles in its technology retailing business. While new store growth is limited the quality rating also benefits from a net cash position and persistently solid EBIT margins.
Assuming an 8.5 per cent discount rate, a sustained return on equity of 29.3 per cent and a payout ratio of 65 per cent, JB Hi-Fi’s estimated intrinsic value is $94.35. Assuming a lower discount rate of eight per cent, the valuation jumps to $104.00. With a current price of $97.75, JB Hi-Fi shares appear to be trading about fair value.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
