By Patrick Avenell
SYDNEY, NSW: The last two interest rate rises have had no effect on business at JB Hi-Fi, and nor will a third rise in December, according to CEO Richard Uechtritz. This is because the vast majority of consumer indices are currently positive, and sentiment is high leading into Christmas.
In another sign that very little seems to be able to halt JB Hi-Fi’s considerable momentum, Uechtritz told Current.com.au that there had been no noticeable drop off in sales at JB Hi-Fi store since the first of two consecutive rate rises. Although he admitted interest rate rises, by their nature, reduce the money in people’s pockets, high sentiment has persisted, and it has not been his stores that have been affected by any privation.
In a rare warning sign to shareholders, however, Uechtritz did concede that should rates rise by two or three percentage points, sales will start to suffer.
“There’s no two ways about it, it takes some discretionary spend out of the pockets, but only 30 per cent of households in the country have a mortgage to start with and with the increments [one quarter of a per cent], they’re still very low interest rates compared to what they have been in the past,” Uechtritz said.
“We didn’t see any affect in the last two interest rate rises of a quarter per cent, we don’t except to see any if it goes up another quarter per cent, but give it another one or two after that, you will see it affects different people differently.
“A jump of two or three per cent can certainly make a difference.”
Uechtritz said that whilst interest rates are on the way up, there are a number of other gauges of consumer sentiment that remain sanguine. He said that rising equity markets, strong real estate prices, stable oil prices and downward trending petrol prices are all strong indicators that retail sales will remain buoyant despite interest rate pressure on mortgage holders.