New CEO continues Kodak connection at JB Hi-Fi

The Kodak connection continues at JB Hi-Fi with yesterday’s announcement that chief operating officer Terry Smart is to succeed Richard Uechtritz as CEO from the middle of the year.

Uechtritz and Smart both worked for Kodak before joining JB Hi-Fi in July 2000 to lead a consortium of private equity investors in a management buy-in. Smart, a former director and general manager of Kodak's retail operations, led the implementation of JB Hi-Fi's management information systems.

As COO, he is responsible for the group's systems and processes which underpin the store operations. Uechtritz, a former director of Kodak (Australasia), was co-founder of Australia’s two photo chains, Rabbit Photo and Smith Kodak Express.

Will Fraser, currently a non-executive director of JB Hi-Fi, retired in 1999 as chairman and managing director of Kodak Australasia, an appointment that followed two years in London as a corporate vice president of Eastman Kodak and regional business General Manager, Consumer Imaging of Europe, Africa, India and the Middle East region.

Both Uechtritz and Smart have made fortunes out of their involvement with home entertainment retailer. From a beginning in 1974 as a single store in the Melbourne suburb of Keilor, JB has grown to become a national chain and the fastest growing and largest retailer of home entertainment products.

Uechtritz is retiring after 10 years as CEO to pursue “personal and philanthropic interests” (he has his own foundation) but after a six month period of absence, he will rejoin the board as a non executive director.

Smart has a significant investment in JB Hi-Fi with a personal holding of 1.5 million shares, worth around $30 million, plus nearly 400,000 options under a long-term incentive program.

Profit up 29% but shares down

Following the surprising announcement about Uechtritz’s stepping down, shares in JB Hi-Fi fell almost 5% despite the company reporting a 29% per cent increase in net profit for the first half of 2009/10.

JB Hi-Fi booked net profit of $76 million for the six months to December 31, 2009, up from $59 million in the prior corresponding period. Sales were up 23% to $1.554 billion while comparable store sales growth in Australia for the period was 10.2%.

JB Hi-Fi said gross margins remained "relatively stable" despite competitor discounting and the strong performance of low margin categories. "Whilst the retail outlook continues to be uncertain, the company is cautiously optimistic that it will have another strong year," JB Hi-Fi said.

JB Hi-Fi reaffirmed previous guidance of a 20% increase in annual sales to $2.8 billion. The company said it opened 15 new stores during the first half of fiscal 2010, and had plans to open seven more in the second half, including Artarmon and Wagga Wagga (NSW), Browns Plains and Mt Ommaney (Queensland) and Bendigo, Northland and Melrose (Victoria).

The 22 new stores in 2009/10 would be the most in any financial year since the company began operations. There are currently 134 JB Hi-Fi stores, with 124 in Australia and 10 in New Zealand. Of those, 122 are JB Hi-Fi branded stores.

"We continue to grow our market share as recently opened stores mature, 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," Uechtritz said.