Electronics retailer JB Hi-Fi (ASX: JBH) has reached a historic milestone that it probably won’t want people to remember. For the first time in a very long time, its profits have fallen, cementing that even offering the lowest prices does not make you immune from the recessionary climate.

In FY23, the Company’s net profit amounted to $524.6 million, falling 3.7% from $545 million in FY22. Until FY23, JB Hi Fi had been witnessing a consistent uptick in its net profit, but the tough retail environment and tightened wallets finally got to it. 

Still, its sales increased to $9.6 billion from $9.2 million, also up 35.7% vs pre Covid, or FY19, and its earnings per share increased by 0.1%. 

Group CEO, Terry Smart, said, “We are pleased to report record sales and earnings per share for FY23. In a challenging retail environment, we remained top of mind for shoppers and grew our market share by continuing to drive our value offering, leveraging the strength of our multichannel offer and maintaining our high levels of customer service.” 

In Australia, EBIT rose by 1.3% to reach $551.9 million, although the EBIT margin decreased by 36 basis points to 8.4%. Its online sales experienced a decline of 20.9%, amounting to $940 million. But, the overall sales saw a 5.6% increase, reaching $6.55 billion, and comparable sales grew by 4.8%. When compared to the pre-Covid period, i.e. FY19, total sales went up by 38.5%. The main areas of growth included Communications, Audio, Accessories, Games Hardware, and Services. 

Its New Zealand arm took the worst hit when it came to earnings, decreasing by 49.9% to $4.06 million from over $8 million. Even so, the overall sales increased by 11.3% to reach $269.30 million. The primary areas of growth included Communications, Audio, Games Hardware, Fitness, and Accessories. However, online sales experienced a decrease of 25.7%, amounting to $29.6 million, which made up 11% of the total sales.

JB Hi-Fi Group’s 2016 acquisition, The Good Guys, experienced a decrease of 14.1% in its online sales, amounting to $341.1 million, which constituted 12.1% of the total sales. EBIT also declined by 11.8% to $213.0 million, resulting in a decrease of 108 basis points in the EBIT margin, which stood at 7.6%.

Smart added, “With the heightened uncertainty in the retail environment, both our brands remain well positioned to leverage their low-price market position as shoppers look to maximise value from their purchases.”

Turning to FY24, the Company reported that, in July 2023, it witnessed a decline of 1.8% in the total sales growth for JB Hi-Fi Australia, and The Good Guys experienced an even larger decrease of 12% in its sales. On the other hand, the New Zealand branch of the company witnessed a rise of 10% in sales during the same period.

With that in mind, the Company plans to expand its presence in New Zealand. It will launch 3-5 new stores per year over the next three years there. The Company also appointed Christy Boyce as a non-executive director with effect from 16 September 2023, hoping to leverage her retail and risk management expertise.