How The Good Guys sales slump is hurting JB Hi Fi

Sydney’s ‘endless summer’ has been cited as driving factor in weak sales within the The Good Guys which has eaten into the Q3 performance of JB Hi Fi.  

These conditions, appear to herald tougher trading conditions ahead for JB Hi Fi which has reported slow growth across both its JB Hi-Fi and The Good Guys stores.

The consumer electronics and home appliance retailer’s trading was down this morning Wednesday May 2, following an update which showed Quarterly sales growth in its JB Hi-Fi division was at 6.8 per cent, down from 10.8% the same time last year, with a comparable sales growth of 4%(8.2% last year).

Meanwhile, quarterly sales growth for The Good Guys was -1.3%, down from 2.6 % at the same time last year, with a comparable sales growth of -2.9% (1.2% last year).

According to the announcement released this morning from JB Hi Fi Limited at the 2018 Macquarie Australia Conference, The Good Guys performance was impacted by “challenging conditions in the Home Appliance market, due to unfavourable weather conditions coupled with heightened price competition.”

“This has had an adverse impact on gross margin in 2HY18 as we continue to focus on sales and market share,” the company said.

As a result, the company has downgraded expected Group NPAT to $230 million, down from $235-240 million. Despite the adverse sales conditions, JB is maintaining a positive outlook, claiming that these factors are only 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.”

But this is cold comfort for shareholders who witnessed their investment in the company fall sharply today, down 7% to $23.78.

Claire Moffat is a digital media specialist and pioneer of Australia's first digital news service for the consumer electronics industry.