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JB Hi-Fi reports sluggish growth

Australian consumer electronics giant JB Hi-Fi (ASX:JBH) has reported sluggish growth, following Super Retail Group’s earlier announcement of a stable but unremarkable start to the 2023-24 trading year. JB Hi-Fi disclosed that first-quarter sales are meeting expectations, with softer trends in its Australian electronics stores and a significant 12.2% decline in sales at white goods retailer The Good Guys.

During the company’s annual meeting on Thursday, CEO Terry Smart stated that JB Hi-Fi is well-positioned to navigate the “heightened uncertainty in the retail environment.” The company reported that first-quarter results align with the group’s expectations as they cycle through the elevated period from the previous year. However, there is still variability within the retail categories, with white goods and high-end electronics showing signs of weakness.

The core business of JB Hi-Fi experienced a decrease in sales in the September quarter compared to the previous year when the retail and economic recovery was underway following lockdowns and pandemic restrictions in both Australia and New Zealand, some of which continued until early 2023.

For the first quarter of 2023-24, JB Hi-Fi’s total sales in Australia dropped by 0.1% compared to the previous year, with comparable store sales down by 1.4%. In New Zealand, first-quarter sales increased by 1% but declined by 1% on a comparable (like-for-like) basis. The Good Guys saw a substantial 12.2% decrease in first-quarter sales, both in headline and comparable store figures.

Earlier in the week, Super Retail Group’s CEO, Anthony Heraghty, reported that the group achieved sales growth of 4% and like-for-like sales growth of 2% in the first sixteen weeks of 2023-24, cycling a 20% like-for-like sales growth in the previous comparative period. Heraghty attributed Supercheap Auto’s strong performance to ongoing strength in the auto maintenance category, while other group brands also showed positive results.

Despite the impact of a weaker currency on the cost of goods sold, the group’s gross margin as a percentage of sales remained modestly favorable to the prior comparative period. However, Heraghty cautioned that continued inflationary pressures on wages, rents, and electricity costs would likely result in an increase in the group’s cost of doing business (CODB) as a percentage of sales in FY24, as previously announced to the market.

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