The JB Hi-Fi Limited (ASX: JBH) share price posted solid gains across June, hitting highs of $43.86 before closing out the month at $43.03. This represents a 16% monthly increase, and an 83% rise on its low of $23.50 in March.
Since the end of June, the JB Hi-Fi share price has sat around the $42–$43 mark. Shares in JB Hi-Fi are up around 49% on this time last year, a significant outperformance on the S&P/ASX 200 Index (ASX: XJO) which is down 11% over the same period.
What drove the JB Hi-Fi share price higher in June
The increase in share price is impressive considering JB Hi-Fi’s exposure to the economic downturn as a consumer discretionary retailer. However, JB Hi-Fi has benefitted from customers spending more time working, learning and enjoying entertainment at home.
In early June, JB Hi-Fi released a trading update and provided guidance on their operations. According to the release, the JB Hi-Fi Australia business had performed strongly during the pandemic. Second half sales were up 20% over the prior corresponding period both in total and on a comparable store sales basis. This compares to first half sales growth of 5.1% and brings its year to date growth to 11%.
Most notably, the Good Guys business performed exceptionally. Its sales were up 23.5% in 2H20. This has been a significant improvement on its performance during the first half, which saw the business deliver only a 1.5% increase in total sales.
In comparison, JB HI-FI New Zealand was impacted by temporary closures following New Zealand government lockdown restrictions. Its sales were well down. It is of note, however, that JB Hi-Fi’s New Zealand arm is considerably smaller than the other businesses.
JB Hi-Fi’s share price surprisingly dropped 4.24% after this announcement, however, it made a strong recovery in subsequent days.
In a nice side note, CEO Richard Murray noted the significant contribution of the group’s team members and stated that JB Hi-Fi “are in the process of finalising a recognition program for our store team members to reflect their over and above efforts.”
In June, JB Hi-Fi also provided guidance that it total sales were expected to be $7.86 billion, comprising of:
- JB HI-FI Australia: $5.26 billion
- JB HI-FI New Zealand: NZ$0.22 billion
- The Good Guys: $2.39 billion.
Foolish takeaway
JB Hi-Fi’s share price has seen a very strong resurgence since its dramatic dip in early March, rising back to hover around the $43 mark. Shareholders will be hoping that restrictions are not imposed again for it to continue its rise.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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