By Emma Koehn
Electronics retailer JB Hi-Fi has reported slowing sales, but analysts say its results are stronger than expected as consumers face increasing pressure from interest rate rises.
The $4.9 billion retailer revealed on Wednesday that while quarterly sales were still well above pre-COVID levels at its stores in Australia and New Zealand and at whitegoods retailer The Good Guys, momentum slowed in the three months to March 31 compared with the same time last year.
JB-Hi-Fi chief executive Terry Smart says the company’s no-frills retail model will serve it well as the economy slows.Credit: Eamon Gallagher
Same-store sales at JB Hi-Fi Australia slipped by 0.1 per cent in the March quarter, the third quarter of its fiscal year. Sales at the Good Guys fell by 3.8 per cent compared with the same period in 2022.
Sales at the company’s New Zealand stores were up by 10.8 per cent.
For the year to date, sales are still up on last year, largely driven by a strong festive trading season. The group’s comparable Australian store sales are up by 5.8 per cent for the financial year so far, while New Zealand sales are up by 14.5 per cent and The Good Guys are 3.8 per cent stronger for the 2023 financial year so far.
“As anticipated, sales growth has started to moderate from the elevated levels seen in the first half of [the financial year], but the group’s trusted value-based offerings have continued to resonate with our customers and grown market share,” the company told investors.
JB Hi-Fi’s Australian sales are up by 38.8 per cent since before the pandemic, and New Zealand’s are ahead by 30.1 per cent. The Good Guys is 22.4 per cent stronger compared with pre-COVID in 2019.
Retail trading figures from the Australian Bureau of Statistics released on Wednesday for the month of March showed that while consumers’ overall spending increased by 0.4 per cent, household goods spending fell by 0.4 per cent.
Despite indications that spending conditions were softening for big-ticket purchases, analysts said JB Hi-Fi’s figures were stronger than expected.
UBS analysts increased their target price for the stock from $46 to $47.50. “[This is] as the slowdown is deferred and less than previously expected,” the investment bank said in a note to clients.
Market watchers were still cautious about future demand, however, given the Reserve Bank’s surprise decision to lift interest rates on Tuesday to 3.85 per cent.
It was a move that caused some economists to warn the central bank’s decision was pushing the country to the brink of recession.
“We expect the deteriorating momentum to continue as consumer discretionary cashflows continue to be challenged by rising costs of living,” E&P Financial analyst Phillip Kimber said.
In a presentation to the Macquarie Australia conference on Wednesday, chief executive Terry Smart pointed to the advantages that JB Hi-Fi’s low-cost operating model and multichannel strategy provide in the current trading environment.
The retailer’s low-cost, no-frills strategy means it can “compete effectively with traditional competitors and new market entrants”, the company said in its presentation.
JB Hi-Fi’s sales have remained resilient in the face of rising interest rates, but Smart did warn at the company’s half-year results that shoppers were being more cautious in their spending.
JB Hi-Fi shares opened stronger and were 0.8 per cent higher at $44.98 in early afternoon trade.
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