JB Hi-Fi has warned of slowing sales at its consumer electronic stores as well as whitegoods specialist The Good Guys

The string of interest rate rises and cost of living expenses is finally denting consumer demand, with retailer JB Hi-Fi warning of slowing sales.

Retail heavyweight JB Hi-Fi has warned that sales have fallen as consumers pull back on spending amid rising living costs.

The group has revealed that its sales momentum has continued to moderate and in the case of its flagship local JB Hi-Fi stores turned negative over the March quarter, with its whitegoods specialist The Good Guys witnessing a 3.8 per cent slide in comparable sales for the three-month period.

Comparable sales – which is the best test for sales strength – for JB Hi-Fi in Australia were down 0.1 per cent in the March quarter, while total sales were up 0.8 per cent for the period.

Although financial year to date sales growth for JB Hi-Fi and The Good Guys remains positive, up 5.8 per cent and 3.8 per cent respectively, the slowdown in sales for the consumer electronics giant since January 1 reflects the fragile state of the consumer and a pullback in discretionary spending in the face of successive interest rate rises.

“As anticipated, sales growth has started to moderate from the elevated levels seen in the first half of fiscal 2023, but the group’s trusted value-based offerings have continued to resonate with our customers and grown market share,” JB Hi-Fi said in a sales update to the market before it presented to the Macquarie companies conference on Wednesday.

It could be the start of a number of high-profile and national retailers also signalling a considerable deterioration in their own sales momentum as household budgets remain under pressure from rising mortgages, rents and other cost of living expenses.

In February at its half-year results, JB Hi-Fi chief executive Terry Smart conceded the snowballing momentum of recent interest rate rises, decades-high inflation constricting household budgets and an eroding Covid-19 savings pile has finally forced consumers to rein in spending. Reporting its half-year results, Mr Smart warned that sales growth had begun to moderate in the new year.

In January, sales growth at its local JB Hi-Fi network was down by more than half, while at its The Good Guys chain same-store sales growth had ground to a halt.

That now looks to have continued well into the March quarter according to the sales update.

E&P Financial consumer analyst Phillip Kimber said JB Hi-Fi Australia’s third quarter sales growth was better than he expected, and The Good Guys in line with expectations, although momentum decelerated for both over the quarter.

“We expect the deteriorating momentum to continue as consumer discretionary cash flows continue to be challenged by rising costs of living. With negative year-on-year sales growth rates expected in the fourth quarter and continue into 2024 combined with record EBIT margins – earnings momentum will be very weak.”

Mr Kimber said he expected this slowing sales momentum to continue to weigh on the JB Hi-Fi share price.

Its shares last traded at $44.61 on the ASX, giving it a market value of $4.88bn.