The JB Hi-Fi Limited (ASX: JBH) share price is pushing higher on Thursday morning after the release of an announcement.

At the time of writing the retailer’s shares are up almost 1% to $42.30. This compares to a sharp decline by the S&P/ASX 200 Index (ASX: XJO).

What did JB Hi-Fi announce?

Hot on the heels of a sales update by rival Harvey Norman Holdings Limited (ASX: HVN) yesterday, this morning JB Hi-Fi released one of its own.

According to the release, the JB Hi-Fi Australia business has been performing very strongly during the pandemic.

Second half sales are 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%.

It doesn’t stop there. The company’s The Good Guys business has been performing even better. Its sales are up 23.5% so far in the second half. 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. As a result of this impressive performance, The Good Guys sales are now up 10.7% year to date.

Unfortunately, things weren’t anywhere near as positive for its JB Hi-Fi New Zealand business. It was forced to close its doors at the height of the pandemic, which has inevitably had a big impact on its second half sales. The business has recorded a 19.3% drop in sales so far this half, which means its year to date sales are now down 7.3%.

Though, given how small this business is in comparison to the other two, I don’t think investors will be overly concerned with this news. Incidentally, management revealed that it is reviewing the carrying value of the New Zealand business and expects to make a non-cash impairment of $25 million in FY 2020.

What has been the driver of JB Hi-Fi’s strong sales growth?

Management advised that its strong sales growth in the second half has been driven by customers spending more time working, learning, and enjoying entertainment at home.

Pleasingly, although the company has invested in additional operating costs associated with ensuring team members and customers remain safe during the pandemic, it has still experienced strong operating leverage from this elevated sales growth.

As a result, management notes that both JB HI-FI Australia and The Good Guys have seen strong earnings growth during the second half.

FY 2020 guidance.

When the company released its half year results in February, it provided guidance for the full year. At the time, it expected total sales to be ~$7.33 billion with net profit after tax in the range of $265 million to $270 million. The latter represents an increase of 6.1% to 8.1% on the prior corresponding period.

The following month the company understandably withdrew its guidance due to the uncertainty caused by the pandemic.

This morning JB Hi-Fi has not just reinstated its guidance, but upgraded it materially.

Barring any significant changes to its trading performance, management expects total sales of $7.86 billion and net profit after tax (after the aforementioned impairment) in the range of $300 million to $305 million. This will be a 20% to 22% increase on FY 2019’s profits.

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Motley Fool contributor James Mickleboro 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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It’s important to properly review your investment portfolio on a regular basis and ask: why do I own this ASX 200 share? Personally, I like to do this just before the end of the financial year as it helps me with my tax planning. I would also recommend doing something similar annually, bi-annually or every quarter, when results are announced.

Doing this year’s review, I found myself asking the question, why do I own this S&P/ASX 200 Index (ASX: XJO) share? I discuss this share below, but first I feel it’s important for me to define myself as an investor and outline my investment strategy.

My ASX 200 investor profile

• Demographic: Generation Y
• Investment time horizon: 50 years +
• Investing experience: high
• Risk tolerance: very high
• End goals: Join the FIRE (Financial Independence Retire Early) movement and go travelling. Pass on a financial legacy to my kids.

My ASX 200 investment strategy

Because I have such a long time horizon in which to invest, as well as minimal financial commitments, I’m able to be an ultra long-term, aggressive growth investor. My strategy is to build a highly diversified portfolio of quality growth companies with a lot of risk, but massive multi-bagger potential. I try to invest funds into the market on a monthly basis (or as close to this as possible).

I have been implementing this strategy for over half a decade now, which has seen my portfolio grow to nearly 60 active positions. But importantly, part of my strategy is to let my winners run and to concentrate the portfolio into about 30 meaningful positions. This is already starting to happen naturally. Currently, including roughly a 10% cash position, over 50% of my portfolio is in 18 stocks. Take it out to 32 stocks and that’s 70% of my portfolio.

So, why do I own this ASX 200 share?

Challenger Ltd (ASX: CGF) is a financial services company known for being Australia’s largest annuity provider. With so much money in superannuation, my thesis was that our aging population would have growing demand for these types of products. As a result, Challenger could provide market beating total returns by investing funds under management. I also thought the company paid a decent dividend.

Challenger is one of the first shares I bought, back when I didn’t have a proper strategy. Because of this, it isn’t fully aligned with my current strategy of targeting growth. With interest rates at historic lows, it’s also harder for Challenger to earn high returns on its funds.

I still think that the investment theme is true and Challenger is a leader in the space. The company also possesses some quality characteristics, but with interest rates so low it probably isn’t the right fit for my portfolio right now. But, it may be for yours.

Foolish takeaway

I wrote this article to highlight the fact we are all constantly learning. I learn the most from my ASX 200 investment mistakes, not my winners. My advice is to invest based on your own personal circumstances and goals.

More reading

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• 5 things to watch on the ASX 200 on Thursday
• Afterpay share price up 7%, ASX 200 edges higher
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• How Australian super funds are letting the team down on ethics

Motley Fool contributor Lloyd Prout owns shares in Challenger Limited and expresses his own opinions. The Motley Fool Australia owns shares of and has recommended Challenger Limited. 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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