JB Hi-Fi shares plunge as Aussies go easy on gadgets spending

SUPER RETAIL

09/05/2024 05:45

By Adwitiya Srivastava
       May 9 (Reuters) - Shares of JB Hi-Fi  JBH.AX  were on
track to mark their worst session in about two years on Thursday
after a trading update from Australia's largest home
entertainment retailer signaled a cutback in consumer spending
as the country faces a cost-of-living crisis and higher for
longer interest rates.
    Shares plunged as much as 6.2% to A$56.25 and were set for
their biggest intraday drop since June, 2022. 
    The company, which has some 300 stores across Australia and
New Zealand, said third-quarter comparable sales growth was down
0.3% compared to a 0.1% drop a year ago in Australia. That
numbers fell 2.9% in the quarter for its New Zealand business,
having risen 10.8% a year ago.
    Discretionary retailers around the country have been
offering their products under discount in a bid to lure
consumers who are thinking twice before splurging on
non-essentials.
    "Deflation in household appliances and consumer electronics
indicates intense competition amid weak consumer demand," said
Johannes Faul at Morningstar.
    Faul does not expect demand growth for home appliances and
consumer electronics to normalise before fiscal 2026, and
forecast the retailer's sales will drop by 2% in 2024.
    Rival retailer Baby Bunting  BBN.AX  fell over 23%, leading
the drag among discretionary retailers after posting a 7% drop
in comparable sales growth for the first half of fiscal 2024.
    Smaller rival Super Retail  SUL.AX  fell around 5% as well,
in track with its peer after issuing a bleak trading update,
post market hours on Wednesday. 
    JB Hi-Fi has been offering various promotions for its
products to customers, a move to improve sales which has inturn
dampened trading activity. 
    "We expect promotional activity to stay elevated and weigh
on JB Hi-Fi’s sales and gross profit margins in the second
half," Morningstar said.
    

 (Reporting by Adwitiya Srivastava in Bengaluru; Editing by
Nivedita Bhattacharjee)
 ((Adwitiya.Srivastava@thomsonreuters.com;))