20140807_jbhifi

In this article for The Switzer Super Report, Roger looks to JB Hi-Fi, a company that’s had a stellar run over the past decade, who may now be facing slowed growth in light of competitive forces. Read here.

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3 thoughts on "JB Hi-Fi – can growth be maintained?"

  1. Just checked out JBH results on Commsec & cashflow is way down. Interested on your thoughts. Looks like the increase in debt might be the cause but interest cover has also increased to 22.64 times. It’s still trading at a reasonable discount to Skaffold’s IV but I assume the forecasts will be adjusted shortly accordingly?? After reading this not sure I want to increase my holding now on this recent pullback.

  2. “….management’s hurdle for long-term performance was reduced from 10
    to 15% earnings per share growth per annum over a three-year period to 5 to 10%.” Those numbers don’t sound big, but that’s a big reduction percentage wise. I think you have identified a lot of the big issues facing JBH. Anecdotally, their prices are not considered as competitive as they used to be either.

    I wouldn’t be surprised if the “Home” stores hold up better than the consumer electronics in the long run, given that many folk will still want to take a look and measurements when it comes to whitegoods. Even there they risk becoming a pseudo showroom if they can’t keep prices competitive.

    Tough times to be a retailer without a lucrative niche.

  3. As mentioned in Scotts article, Amazon is now starting to roll out same day delivery in some areas.

    As for JBH, from a bricks and mortar perspective they are still head and shoulders above their peers. Luckily for them, online retailing has been taken up at a slower rate than our cousins in countries such as the US but this just means that there is more growth potential for online businesses as they try to fix this discrepency.

    The problem for JBH is where to from here, i am in agreement that i expect future stores to not be as profitable as the past and online retailing will only continue to take market share. I think, an advantage for JBH, is that they can use their existing scale to perhaps be a form of Aussie amazon for technology products if they are willing too.

    Some of their products though they sell will very soon be obsolete (do CD players still exist these days?). I think the physical stores will need to be refurbed to match the new reality (CD’s and DVD’s make up a huge amount of space in some stores, what to do with this?).

    Always an interesting company to watch and one that may be a good opportunity if the price is right. Their brand equity is great and seem to have decent management who understand retail. However, at current levels i would agree that it is better to look elsewhere.

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