News & Analysis

JB Hi-Fi may have just successfully weathered the pandemic

31 March 2022 By Anthony Nguyen

Share

JB Hi-Fi is an Australian/New Zealand consumer electronics, Home Appliances and Technology retailer. The company operates 316 stores across Australia and New Zealand.

JB Hi-Fi appears to be still going strong despite the general retail disruptions brought on by COVID-19. Based on the uncertain nature of the pandemic, they are having issues with providing a specific profit forecast for the remainder of this financial year.

They believe there will be an increase in customer demand and this will result in a strong sales growth for this upcoming quarter. For the third quarter of this financial year, the total sales across the Australian stores have increased by 11.3%, with comparable in-store sales also increasing by 10.5%.

JB Hi-Fi’s share closed at $55.78 on Wednesday. This is an increase of nearly 30% from January’s low of $43.39. This performance can be an indication of the retail market bouncing back after the pandemic. It could also be attributed to customers improving their ‘work from home’ space or people spending more of their savings, which was accrued during the lockdowns.

The Good Guys brand (owned by JB Hi-Fi), which is predominantly focused on whitegoods, televisions and larger appliances, had produced a sales growth of 5.7% within the same period. They were up 5.1% on a comparable store basis. The company had said “This sales growth, combined with disciplined cost control, and stock availability and sales mix benefits in gross margins, particularly in The Good Guys, drove strong operating leverage across the group”.

JB Hi-Fi is unfortunately growing slower in New Zealand when compared to Australia. New Zealand’s comparable store sales and total sales had only increased by 2.9%.

With the third quarter coming to an end, in Australia, JB Hi-Fi’s total sales growth has increased by 1.5% and The Good Guys’ growth has also increased by 1%. New Zealand’s figures show a decline of 2.5%, this could be due to the harsher lockdown and restrictions endured by New Zealand compared to Australia.

JB Hi-Fi believes it is not in a position to provide a full year’s sales and guidance due to the ongoing disruption from COVID-19 and other international uncertainties.

Bryan Raymond, JP Morgan’s head of consumer research, believes that JB Hi-Fi had successfully pivoted to online sales without sacrificing their profitability. He also believes JB Hi-Fi to be one of his top two picks in the retail sector to persevere through the higher inflation, the other company being Premier Investments. He stated that working from home will continue to be the norm and consumers are likely to upgrade their home offices and that this demand will continue to help JB Hi-Fi through to 2025.

All in all, JB Hi-Fi’s performance can be used as an indicator of the retail sector bouncing back after the pandemic. With future sales predictions being uncertain, their performance will be at the mercy of the consumers. Only time will tell if the sales growth can continue post pandemic.

If you would like to take this opportunity to invest in JB Hi-Fi and don’t already have a trading account, you can register for a Shares or Shares CFD  account at GO Markets.

Sources: GO Markets MT5, ASX, Wikipedia, JB Hi-Fi,  AFR

Ready to start trading?

Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.