JB Hi-Fi raises dividend as New Zealand growth offsets a softer July
JB Hi-Fi delivered record FY2026 sales of $11.06 billion and lifted its fully franked ordinary dividend by 22.5% to 337 cents per share. The early FY2027 trading update was less assured, with Australian sales and The Good Guys declining in July as shoppers waited for promotions and technology supply remained constrained.
- Record group sales of $11.06 billion, up 4.8%
- NPAT attributable to owners rises 6.0% to $489.9 million
- Ordinary dividend increases 22.5% to 337 cents per share
- JB Hi-Fi New Zealand returns to positive EBIT
- July sales weaken in Australia, The Good Guys and e&s
Record revenue supports a larger shareholder payout
JB Hi-Fi Limited (ASX:JBH) closed FY2026 with a record sales result and a materially higher dividend, but the first glimpse of the new financial year carried a warning about promotional dependence. Group sales rose 4.8% to $11.06 billion, EBIT increased 5.8% to $734.4 million and NPAT attributable to owners climbed 6.0% to $489.9 million.
The board declared a fully franked final dividend of 127 cents per share, taking the ordinary dividend for the year to 337 cents per share, up 22.5% and equal to about 75% of NPAT. The payout is the first full-year test of the group’s revised 70% to 80% payout target, introduced for FY2026, while the balance sheet retained $206.5 million of net cash and no interest-bearing debt.
New Zealand leads while the core Australian businesses broaden more slowly
JB Hi-Fi Australia remained the earnings engine, with sales up 4.4% to $7.42 billion and EBIT up 3.2% to $547.3 million. Online sales rose 7.0% to $1.28 billion, although the division’s EBIT margin slipped nine basis points to 7.38% as sales mix and operating costs edged against profitability.
The sharper improvement came from New Zealand. Sales in local currency rose 26.0% to NZ$499.5 million, comparable sales increased 15.3% and EBIT swung from a NZ$0.2 million loss to a NZ$4.1 million profit. The Good Guys also expanded EBIT by 6.0% on an underlying basis to $184.0 million, helped by a 27-basis-point gross-margin improvement.
e&s remains the less settled part of the portfolio. Reported sales rose 21.3% because FY2025 included only ten months of ownership, but comparable sales fell 3.2% and EBIT was negative $0.4 million. Management said investment in stores and the commercial division was generating written sales expected to be delivered and recognised in future periods, while the migration of wholesale activity to agency sales complicates the headline revenue comparison.
July exposes the cost of waiting for promotional events
The new year began unevenly. July sales fell 0.5% for JB Hi-Fi Australia and 1.7% for The Good Guys, with comparable sales matching those declines. e&s sales dropped 2.7% and comparable sales fell 4.0%, while New Zealand continued to grow strongly, with total sales up 20.9% and comparable sales up 11.7%.
The group said customers were increasingly shifting spending towards key promotional events, while supplier price increases and stock shortages were weighing on technology categories. That makes the FY2027 plan less about a single earnings target, as none was provided, and more about execution: four new Australian JB Hi-Fi stores, two New Zealand stores, a Good Guys opening, expanded delivery infrastructure and a larger retail-media network.
Cash generation funds expansion, but inventory is rising
Operating cash flow remained substantial at $701.2 million, although inventory increased 4.5% to $1.36 billion and net working capital rose by $85.2 million. The report says stock was purchased earlier to get ahead of supplier price rises and secure availability for the June promotional period. Inventory turnover consequently eased to 6.5 times.
That is manageable alongside $270 million of undrawn borrowing facilities, but it gives FY2027 trading added importance. The company plans to invest in Home Delivery Centres, peak-period fulfilment, store formats, electronic shelf labels and e&s systems while preserving its low-cost model. The test is whether those investments improve productivity and availability without forcing deeper discounting.
Board transition and unresolved legal exposure
Board succession will also move into focus at the 29 October annual meeting. Long-serving director Richard Uechtritz is due to retire, while former group chief executive Terry Smart is set to join the board as a non-executive director from 5 October and stand for election.
The annual report also keeps two matters open: a class action concerning the sale of extended warranties in JB Hi-Fi Australia, and a Federal Court appeal over a technical tax issue. The group denies the class-action allegations and says the outcomes of both matters cannot currently be determined. For shareholders, the immediate question is whether the strong FY2026 cash and earnings performance can carry into a year in which July already shows consumers becoming more selective.
Bottom Line?
The dividend and balance sheet provide a solid base, but FY2027 will be judged on whether promotional volatility, inventory investment and e&s losses can be contained.
Questions in the middle?
- Can New Zealand sustain its growth and turn improving margins into a larger earnings contribution?
- Will July’s weaker Australian trading persist outside major promotional events?
- How quickly can e&s convert strategic investment and written sales into positive EBIT?
