JB Hi-Fi reports decline in sales

Inflation, rates hit growth

JB HI-FI has warned that its strong sales growth has started to slow, hit by nine interest rate hikes since May, soaring inflation and uncertainty about the economic outlook.

Same store sales growth for its JB Hi-Fi stores in Australia more than halved in January, while sales growth at its Good Guys retail network ground to a complete halt for the month.

It is one of the first tangible signs that consumers have begun to rein in their spending as the weight of successive interest rate hikes by the Reserve Bank since May has crushed their willingness to spend up on discretionary goods.

Reporting its half-year results to December 31 on Monday, which confirmed record sales and earnings, JB Hi-Fi chief executive Terry Smart said sales growth had begun to moderate in the new year.

“While we are pleased with the January trading result, with sales continuing to be well above pre-Covid January 2020, we have seen sales growth start to moderate from the elevated levels seen in the first half of fiscal 2023,” Mr Smart said.

The consumer electronics giant confirmed the huge appetite for its range of electronics, gadgets, home appliances and whitegoods over the December half after it reported record revenue of $5.2bn, up 8.6 per cent, and a near 15 per cent jump in half-year net profit to $329.9m.

JB Hi-Fi declared an interim dividend of $1.97 a share, up sharply from $1.63 last year, and payable on March 10.

However, the record set of numbers hit a brick wall after Christmas, according to the trading update provided at the half-year results on Monday.

Total sales growth for its Australian JB Hi-Fi chain was 2.5 per cent in January, against growth of 4.3 per cent for the same month last year, with comparable sales growth dropping by more than half in the month to 1.5 per cent.

At its Good Guys retail chain, sales growth was flat against 2.5 per cent in January 2022, while comparable sales growth was also zero against 1.9 per cent in January 2022.

“As we enter an uncertain period, our business is wellplaced with a proven ability to adapt to any changes in the retail environment and trusted value-based offerings that will continue to resonate with our customers and grow our market share,” Mr Smart said.

In terms of the first-half results, JB Hi-Fi reported group earnings of $479.2m, which was up 14 per cent, with strong sales growth and improved gross margins partially offset by increases to the cost of doing business.

At JB Hi-Fi in Australia, sales lifted 9.1 per cent to $3.59bn, with same store sales growth of 8.5 per cent.

Gross profit jumped nearly 15 per cent to $820m.

The Good Guys’ sales rose 7.3 per cent to $1.54bn, with same store sales better by 7.3 per cent.

Gross profit rose more than 10 per cent to $358.4m.