JB Hi-Fi boss wary of softer spending as sales lose zip

JB Hi-Fi has surprised the market with better than expected results despite a spending slowdown, but the electronic retailer’s boss, Terry Smart, is under no illusions about the looming tough slog as customers shy away from big purchases.

While the retailer has so far managed to ride out the belt-tightening by consumers, Smart said it was clear that the economic environment was getting tougher.

JB Hi-Fi chief executive Terry Smart says the retailer’s low-price focus comes at a time when shoppers demand more value.Credit: Eamon Gallagher

“It’s just absolutely challenging out there ... We anticipate that it is going to remain more challenging in the market,” he said.

Shares in the $5.3 billion retailer picked up on Monday despite the retailer posting a 3.7 per cent dip in the 2023 financial year profit to $524.6 million. Sales in the last quarter slowed appreciably, dropping 1.8 per cent across JB Hi-Fi’s Australian stores and 12 per cent across The Good Guys stores.

The numbers were ahead of consensus expectations, and JB Hi-Fi’s annual sales landed at a record $9.6 billion.

However, Smart said consumers had started seeking bargains on electronics and home goods over the past few months.

“We are seeing a higher level of the on-floor discounting – consumers are prepared to shop around at the moment,” he said.

Smart said that some product lines continued to trade strongly despite tougher market conditions, with mobile phones, gaming consoles and small kitchen appliances, such as coffee machines, continuing to show strong demand.

Despite the solid numbers, the retailer has trimmed its final dividend to $1.15 per share, compared with $1.53 for the second half of 2022. JB Hi-Fi shareholders will take home a total payout of $3.12 for the year, down 4 per cent on 2022.

Total sales at JB Hi-Fi’s Australian stores were up by 5.6 per cent to $6.55 billion, and grew by 11.3 per cent at the company’s New Zealand stores to hit $NZ292.1 million ($269 million).

The Good Guys is experiencing a slowdown in sales growth.

White goods retailer The Good Guys experienced a softer growth in the same period, of 0.8 per cent to $2.81 billion.

MST Marquee retail analyst Craig Woolford said that while the company had a sales slowdown and a dip in margins, the overall pace of the trends has been slower than expected.

“With a clean inventory position, price inflation and fundamentally higher market share, some of its gains over the past five years are likely to stick,” he said.

UBS analyst Shaun Cousins said that July like-for-like sales had slowed less than expected at JB Hi-Fi, but had dropped by more than was anticipated at The Good Guys.

JB Hi-Fi shares have performed strongly so far this year despite broader consumer confidence fears: shares are ahead by close to 15 per cent since January, having jumped by around 3 per cent on Monday.

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