JB Hi-Fi will focus its sales on promoting affordable products to bargain-savvy shoppers and seek to strike better deals with suppliers over the next six months, after posting a significant profit drop.
The electronic retailer’s half-year net profits of $264.3 million represented a 20 per cent drop compared with the same time last year, while total sales came to $5.2 billion, down from $5.3 billion, as customers haggled for better deals.
JB Hi-Fi chief executive Terry Smart said margins declined due to an increase in “on-floor discounting”, such as customers seeking to price-match offers from other retailers, and said Australians were still focused on value.
“Consumers were trading down, so we do need to ensure that we’re marketing the right products, we’re advertising and promoting the products which are relevant to them, and that we also modify our ranging to ensure that we cater for their needs,” he told this masthead.
Gross profit fell 3 per cent and gross margin also declined, with retail staff instructed to lower prices to close a sale. “We’re having to match a lot more deals on the floor,” Smart said.
Despite the sales and profit drop, the half-year figures were better than market expectations, sending JB Hi-Fi’s share price 7.1 per cent higher to $60.58 at the close.
Smart said it had been a more challenging and competitive trading environment, but also noted that inflation was settling, interest rate rises were slowing and tax cuts appeared to be on their way. The electronics retailer is also relying on new product launches to go some way to improving sales.
“It is as much around doing price promotions as it is about new product coming out. We’re seeing a regular annual release of new products continuing to hit the market, be that TV upgrades [or] mobile phones; we just need to keep seeing those, which we will, and that will be positive for the business,” he said.
The retailer, which also operates in New Zealand and owns The Good Guys chain, saw its total sales from its Australian business rise 0.7 per cent to $3.6 billion, benefiting from Black Friday and Boxing Day sales. Mobile phones, gaming hardware, small appliances and white goods sold well.
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