JB HI-FI has ruled out acquisitions in the near term to focus on an extensive store roll-out in Australia and New Zealand under the leadership of a new chief executive, following the shock announcement yesterday by long-serving boss Richard Uechtritz that he would soon retire.
Mr Uechtritz, who led a private equity consortium to seize control of the retailer in 2000 and then steered its successful public float in 2004, said he would step down in July or August, to be replaced by his close colleague, the present chief operating officer, Terry Smart.
News of his exit triggered a near 7 per cent dive in JB Hi-Fi shares despite the DVD, television, stereo and electronics retailer also unveiling a record interim profit of $76 million, up 28.8 per cent, driven by more than $1.55 billion in sales.
Mr Smart will inherit a retailer that is tipping full-year sales of $2.8 billion for 2009-10 after confirming earnings guidance of a net profit in the range of $117 million to $120 million, or a 24 per cent to 27 per cent increase on the previous year.
Mr Uechtritz attracted a large and loyal shareholder base after his transformation of JB Hi-Fi into a thriving business - especially during the depths of the global financial crisis last year - and will reward investors one last time upon his departure with a greatly puffed-up interim dividend of 33¢ a share, up 120 per cent on last year's payout.
Mr Uechtritz said the dividend, to be paid on March 5 and pumped up by a payout ratio of 60 per cent against a previous target of 50 per cent, reflected JB's intention to focus on an almost doubling of its store numbers to 210 over the next six years rather than growing via acquisitions.
''We have got nothing on our radar - otherwise we would be keeping the dollars,'' Mr Uechtritz said. ''In Australia, there is nothing besides the large established players that we feel would complement JB in the electrical industries.''
The retailer ran rings around its biggest competition during the first half, recording comparable-store sales growth for December of 6.5 per cent at a time when many leading retailers, such as Myer, suffered in the month with negative sales growth.
''We continue to grow our market share as recently opened stores mature,'' Mr Uechtritz said. ''We open new stores, expand our offering and reduce our prices on the back of increased economies of scale and a continued focus on costs.''
JB Hi-Fi opened 15 new stores in the half and should open another seven in the second half of 2009-10.
Mr Uechtritz said a 260-basis-point fall in gross margins to 21.1 per cent was due to tough conditions in New Zealand, where prices were cut to capture market share. The market was showing signs of improvement this year.
Following Mr Uechtritz's retirement and a six-month period of absence, he will rejoin the JB Hi-Fi board as a non-executive director in early 2011.

AT A GLANCE

Sales$1.55b+23%
Profit$76m+28%
EPS33c+120%
Dividend566%