AMP increases share in volatile JB Hi-Fi

By James Wells

MELBOURNE: AMP Capital has increased its share in publicly-listed Narta retailer, JB Hi-Fi, to 6.1 per cent from 5.06 per cent, even though the stock has recently displayed volatility.

In the past 12 months, the share price has risen 50 per cent, but since reaching a record high of $5.55 on May 15, it fell more than 18 per cent to $4.52 before rebounding over $5.00 this week.

AMP Capital’s senior portfolio manager, John Whiteman, told the Australian Financial Review that after speaking to several retailers he thought the retail sales environment was still patchy.

“Retailers of electronic goods are going quite well and this is driven by plasma and LCD television sales. The group is also doing relatively well driving market share via growth in new store numbers.”

One market analyst told that JB Hi-Fi’s move into the New Zealand market could be positive for shareholders, even though the recent price volatility may have been caused by investors concerned about the timing of the expansion.

“JB Hi-Fi’s value strategy has an excellent chance of working in New Zealand because the consumer has been well-trained on price. There is still a lot of room to move within Queensland, Western Australia and South Australia, but there does not seem to be a lot of interest in this at the moment," the analyst said.

“The information technology expansion also makes sense, but this will take time. It is relatively low gross margin and is not expected to add materially to incremental sales and will be more of a substitute for slower sales elsewhere,” he said.

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