More signs of a recovery are emerging for the retail sector, with electronics retailer JB Hi-Fi announcing positive earnings guidance which sent its shares soaring 10% this morning.
The positive results also come as the retail industry has issued a warning the government’s increased Medicare levy could affect retail sales.
The results also come a day after Super Retail Group announced a similarly strong result.
Bentley’s partner David Gordon says the results indicate the possibility of a “resurgence” in retail sales.
“I think many retail categories have bottomed out, and I think retailers have spent two or three years getting used to a new reality,” he says.
“Many retailers have refocused on the core businesses.”
Super Retail Group announced its auto division recorded comparable sales of 5.1% in the 43 weeks to April 27, with the sports division recording comparable sales of 7.8%.
The business also mentioned its leisure division, which includes Rays Outdoors, recorded strong comparable sales, although like-for-like growth was below expectation in the boating/camping/fishing division.
The company even said its gross margin has increased due to improvements in sourcing and supply chain management.
But electronics retailer JB Hi-Fi has stolen the attention today, saying it expects net profit to be between $112 million and $116 million, representing a 7-12% increase from the previous corresponding period.
Sales are expected to rise from $3.25 billion to $3.3 billion. But more importantly, comparable store sales was 3% for the four months to April 30 – in the previous 10 months comparable store sales were at negative 1.3%.
“This updated guidance has been driven by stronger than expected sales in the second half of [the 2013 financial year,” JB Hi-Fi said in a statement.
Shares have risen 10% this morning, and were sitting at $16.73 at 11.00 AEST.
The positive results represent another turning point for the retail sector, which has suffered several years of discounting and poor performance from even major retailers.
Gordon says given the amount of effort these businesses have placed in closing unprofitable stores and pursuing sustainable growth, they will be “well positioned to take advantage of what’s coming”.
“Is this a long term development? I think so.”
“We’re seeing a move towards a more positive retail environment, and the start of a type of resurgence in retail sales.”