JB Hi-Fi posts huge yearly profits despite ‘retail recession’ devastating Myer and David Jones

Tech giant JB Hi-Fi has revealed an increase in profit despite the ‘retail recession’ bringing down department store empires such as Myer and David Jones.

The company revealed on Monday their net profit was up by 7.1 per cent to $249.8 million, with a total of $7.1 billion in sales.

This is compared to $233.2 million in the previous financial year.

The company’s CEO Richard Murray said he was pleased with the record sales and earnings, adding JB Hi-Fi New Zealand and The Good Guys showed similar results.

He thanked the team and said he hoped the 2019-2020 financial year would reveal similar growth.

Mr Murray said that DVD and CDs have fallen thanks to streaming services – but vinyl record sales are booming.    

‘The growing area is vinyl which (shows) people like to own things and touch and feel, and I think that does sometimes get lost in the conversation,’ he told news.com.au.

‘That’s what the power of retail moving forward is — you’ve got to have a great online offer, you’ve got to have great in store offer. And we think that is very powerful.

‘There’s no doubt people are streaming more than ever before, but I think people like to collect things and own things.’

The company’s CEO Richard Murray said that DVD and CDs have fallen in the face of streaming services – but vinyl record sales are booming

He said there is nothing like a vinyl record and people who are passionate appreciate the unique sound. 

The profit gain comes after the NAB business survey declared earlier this year that the retail sector is ‘clearly in recession’.

NAB group chief economist Alan Oster said in a podcast in May: ‘While the retail industry has lagged the other sectors for some time, the recent deterioration has seen conditions in the industry fall to levels not seen since the GFC.

‘This suggests that the consumer remains highly cautious with anything but spending on essentials because of ongoing slow income growth, high debt levels and possibly some concerns over falling house prices.’ 

Earlier this month Woolworth Holdings, the South African company that owns David Jones, had to write down the value of the department stores by $437 million, according to the ABC.

Earlier this month Woolworth Holdings, the South African company that owns David Jones, had to write down the value of the department stores by $437 million (stock)

While in 2018 Myer posted an annual loss of $486 million.

Retail consultant at DGC Advisory Geoff Dart told Sydney Morning Herald that moving online may not be able to help.  

‘David Jones and Myer have not kept up to speed with other online retailers like JB Hi-Fi or even Coles,’ he said.

‘The matter is that I think they know what to change, but I don’t think they know how to. They’re in a death spiral.’

While in 2018 Myer posted an annual loss of $486 million (stock)