‘We’re known for value’: JB Hi-Fi boss promises to keep discounting
By Jessica Yun
Shoppers hungry for a good deal on tech purchases will be able to find them at JB Hi-Fi and The Good Guys, chief executive Terry Smart has said, after the retailer posted a drop in revenue and profits in a tough trading environment.
Retail employees are encouraged to offer on-the-spot price matching and promotions to consumers who “absolutely trust” the electronics and white goods retailers to deliver on this, he said.
JB Hi-Fi chief executive Terry Smart.Credit: Eamon Gallagher
“It’s very much top of mind for consumers. We’re known for value, we’re known for discounts, we’re known for price, all the staff being able to do deals on the floor,” Smart said.
“What you’re seeing in our margins today is during a very aggressive promotional period. Our margins hold up during those times. It is what the business has built itself on over the years.”
JB Hi-Fi Australia’s gross profits dipped 0.9 per cent and gross margins fell 42 basis points to 22.2 per cent.
Customers snapped up smartphones, laptops and other tech devices over the past year, but held out on buying televisions as they managed their budgets more carefully.
“[Consumers] want to upgrade, they want the latest, and they’re continuing to do that … products like TVs [are] a much more a discretionary item, and therefore they’re holding off upgrading at the moment,” he said.
Meanwhile, customers seeking to replace a home appliance at The Good Guys might go for a cheaper model. “What we are seeing is that they’re looking for better value. They’re looking to trade down.”
The $8 billion ASX-listed retailer revealed an 8.2 per cent drop in earnings to $634.1 million and a 16.4 per cent decline in net profits to $438.8 million for the 2024 financial year.
It also declared a special fully franked dividend of 80¢ per share, which means $200 million will go to shareholders when taken together with the final dividend of $1.03 per share due to be paid on September 6.
‘The combination of good sales and gross margins adds to the quality of the result.’
Craig Woolford, MST Marquee senior research analyst
Despite the fall, the unexpected special dividend and the numbers beating analyst expectations sent JB Hi-Fi’s share price 8.4 per cent higher at the end of Monday’s trading session.
Shoppers’ focus on finding a good deal has led JB Hi-Fi and The Good Guys to modify their ranges to offer more affordable products. Smart added that the business was able to respond fairly quickly to shifts in consumption habits.
“Whoever is out there buying, we want to ensure that we’ve got what they need, whether that’s price, range, service,” Smart said. “If consumers are more interested in premium, we can really ramp that up quickly.”
While JB Hi-Fi’s Australia and New Zealand division recorded sales increases of 1 per cent and 12.3 per cent respectively, The Good Guys’ sales declined 4.8 per cent.
The company also announced the acquisition of 75 per cent of e&s, a Victoria-based white goods business selling kitchen, laundry and bathroom appliances, for $47.8 million, with its managing director, Rob Sinclair, to continue in his role.
The Good Guys has been able to modify its range to offer more affordable products.
Smart said e&s was “highly complementary” to the business and gave it a foothold in markets such as premium appliances that JB Hi-Fi was not in yet.
“It really picks up where The Good Guys finishes off, moves into the premium products. It’s a very different sales experience [and] a very different marketing approach to commercial and boutique and volume builders.”
Analysts from UBS, Jarden, E&P Capital and MST Marquee said JB Hi-Fi’s results had beat expectations.
“JB Hi-Fi has reported an impressive financial year 2024 result with good sales and gross margins in the second half. The combination of good sales and gross margins adds to the quality of the result,” said MST Marquee senior research analyst Craig Woolford in a note.
“The share price is likely to be strong today given the earnings upgrade potential. However, the multiple is high and makes it difficult to see the shares rallying in a sustainable way.”
In July, the consumer watchdog launched legal proceedings against The Good Guys for making allegedly misleading claims on promotional schemes across four years and failing to hand over store credit. JB Hi-Fi is defending the case.
“It’s about just ensuring that there are no gaps in our compliance with the law. But we take it very seriously,” Smart said.
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