Australian electronics retailer JB Hi-Fi Ltd has reported a loss in its New Zealand business but is continuing to expand here, includsing opening a store in Dunedin next year, in the belief that scale will deliver profits.
The company said when reporting annual earnings in Australia that it expected to be profitable in New Zealand during the 2011 financial year.
The company today reported a 26% increase in full-year profit across its group, and said it expected to grow sales by 17% in the current year.
It reported a $NZ4.4 million loss before interest and tax in its New Zealand business. The company has 10 JB HiFi stores in New Zealand and closed five and rebranded one Hill and Stewart store during the year.
The profit margin in New Zealand was minus 2.6%. It said in a normalised basis the loss was $NZ2.5 million.
JB branded store sales in New Zealand grew 34.7% percent to $NZ147 million.
Overall sales growth in New Zealand, including a closed Hill and Stewart store, was 11.3%. The company opened one new JB HiFi store.
"New Zealand continues to show signs of improved trading from the 10 JB stores as we increase our scale, buying power and grow brand recognition," chief executive Terry Smart said.
"We expect to open three JB stores in New Zealand during 2011," he said.
The new stores are in Dunedin's Meridian mall, Sylvia Park, in Auckland, and Bayfair, in Mount Maunganui.
JB Hi-Fi reported net profit in 2009-10 of $A118.7 million ($NZ149 million), up from $A94.438 million in 2008-09.
JB Hi-Fi aimed to have 210 stores across Australia and New Zealand.
It incurred $A2.5 million of costs in closing the Hill and Stewart stores in New Zealand but said they contributed less than 15% to New Zealand turnover.
The now closed Hill and Stewart stores in New Zealand made a loss of about $A1.5 million.
