JB Hi-Fi Trims its Profit Forecast for FY18

April Davis By April Davis | 02 May 2018

JB Hi-Fi shares plummeted by around nine percent Wednesday morning after the tech and entertainment retailer announced its profit forecast would be lower than originally expected.

The company’s shares fell to a five-month low of $23.29 after representatives said in an investor presentation that its white goods and appliances chain, The Good Guys performed below expectations because of “unfavourable weather conditions coupled with heightened price competition”.

In the third quarter, The Good Guys’ sales were down 1.3 percent, while comparable sales also dropped 2.9 percent.

“This has had an adverse impact on gross margin in 2HFY18 as we continue to focus on sales and market share,” the company said.

“Whilst the challenging conditions in the home appliance market are expected to impact performance in the short term, we remain confident in the group model and the medium- and long-term outlook for The Good Guys and JB Hi-Fi.”

While The Good Guys had a tough quarter, JB Hi-Fi stores, while remaining profitable in the March quarter, are also showing signs of slowing after a strong year of growth in 2017.

Over the last three months, the JB Hi-Fi chain grew by four percent, a rate that’s half it was last year when the company experienced an eight percent increase in growth for the third quarter in 2017. Sales figures were also reported lower than they were in 2017, with the retailer’s revenue increasing by 6.3 percent in the last nine months, which is behind last year’s rate of 7.9 percent.

JB Hi-Fi claims that both retail businesses were impacted by the timing of Easter, which resulted in one less day of trade for the quarter.

JB Hi-Fi has spent the last 12-months integrating The Good Guys into its business model, after purchasing the white goods retailer for $870 million in 2016. This acquisition launched JB Hi-Fi into a higher margin in the home appliance and white goods categories, ahead of Harvey Norman. This integration period was originally predicted to take three years and deliver net synergies of $15-$20 million per annum.

Lower than expected results over the last quarter could leave a lasting mark on this multi-million dollar prediction, however, JB Hi-Fi and The Good Guys are taking steps to ensure that doesn’t happen.

Moving forward, company representatives say the key point of focus will be on improving in-store experiences, supplier engagement, and product delivery options in a multichannel environment, for both brands.

Never miss our best stories. Sign up for Power Retail’s free weekly newsletter and find our daily stories on FacebookTwitter, and Instagram.

0 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *