The cost of living crisis isn’t denting demand for ‘must have’ tech

Consumers determined to have new plasma TVs and the latest iPhones are buffeting JB Hi-Fi from the cost of living crisis hitting other retailers, its chief says.

JB Hi-Fi boss Terry Smart says consumers view technology such as iPhones, laptops and plasma TVs as a “must have”. Picture: Arsineh Houspian.

JB Hi-Fi boss Terry Smart says consumers are increasingly viewing technology such as iPhones, laptops and plasma TVs as a “must have” despite the cost of living crisis with sales at its JB Hi-Fi New Zealand and The Good Guys arms accelerating to Christmas.

The strong momentum in sales was evident in a quarterly sales update provided at the JB Hi-Fi annual general meeting in Melbourne on Thursday, with sales growth between July and the end of September ahead of market forecasts to drag the share price 6 per cent higher.

Mr Smart told The Australian after the AGM there was strong growth recently out of New Zealand for JB Hi-Fi as well as its whitegoods retailer The Good Guys while its flagship Australian JB Hi-Fi stores were showing sales trajectory consistent with updates in August but this was due mostly to the timing of new tech releases.

In the current market and economic settings, shoppers still wanted to buy up technology but were demanding value - which was JB Hi-Fi’s sweet spot.

“The cost of living crisis does impact, but our brands are all about value and at these cost of living crisis points people look for value and I think that is what we are benefiting from at the moment,” Mr Smart told The Australian on the sidelines of the AGM.

“And we are benefiting from selling tech that is a ‘must have’, that people just want to have and they want to get that tech - they just don’t want to overpay for it to get the best value they can for it.”

At the AGM the company provided an update for its recent trading, showing total sales growth at JB Hi-Fi Australia from July 1 to September 30 up 4.9 per cent with same store sales better by 5 per cent and JB Hi-Fi New Zealand sales up 19.6 per cent and 2.7 per cent for same store sales. At The Good Guys total sales were up 5.3 per cent for the period and comparable sales up 5 per cent.

The sales performance was better than market expectations, with the largest division of the company, its JB Hi-Fi Australian stores, tipped by the market to have sales growth for the quarter of closer to 3.5 per cent.

“JB Hi-Fi’s first quarter sales growth rates were stronger than we expected for both JB Hi-Fi Australia and The Good Guys,” said E&P analyst Phillip Kimber.

“Sales momentum over the first quarter relative to July moderated for JB Hi-Fi Australia, but accelerated for The Good Guys.”

Shares in JB Hi-Fi rose 6 per cent in morning trade on release of the sales update to hit as high as $82.71.

Mr Smart said “absolutely people want the latest tech and need the latest tech”.

“It is such a critical part of their lives these days and an important part of their lives.”

Mr Smart also said the retailer was pleased with the recent opening of a new showroom in Canberra for its recently acquired bathroom and kitchen fittings chain e&s with the company to focus on rolling out stores specially catering to trade professionals such as builders and architects as it takes the e&s chain from its base in Victoria to across Australia.

In August at JB Hi-Fi’s full-year results the retailer announced it had agreed to pay $47.8m to buy a controlling stake in kitchen, laundry and bathroom products chain e&s Trading.

The plan is to take the Victorian retailer nationwide, with the first showroom targeting trades and professionals opening in Canberra a few months ago and trading well, Mr Smart said on Thursday.

He said the key early opportunity for e&s in its national rollout was to open showrooms specifically catered to professionals like builders with other retail stores to follow interstate.