Compiled by Claire Reilly
JB Hi-Fi released its half-yearly results today, posting a 3 per cent increase in sales and profits across its store network, but a 3.4 per cent decline in comparable store sales, driven largely by the TV category.
Following the results release, JB Hi-Fi CEO Terry Smart spoke about the areas of the business that were performing well and those that were struggling, beginning with the flat panel category.
So which areas of the business are going strongly and which have failed to meet expectations? Current.com.au breaks down the JB’s performance in Terry Smart’s words.
Weak TV sales
“Whilst we continue to see total sales growth, the Visual (TV) category in particular negatively impacted comparative store growth,” said Smart. “Even with an increase in transactional volumes… Visual or TVs accounted for 85 per cent of the 3.4 per cent decline [in comparable store sales].
“TV category sales are down 11.2 per cent for the total company. Market stats are indicating that the industry is down around 20 to 22 per cent in value, so overall, we’re continuing to gain good market share.
“[But] we’re not seeing price deflation in that category any more. In fact, in branded panels we are seeing some inflation. While hard to predict the timing, the category is moving towards a sales environment of a more stabilised replacement cycle. Once it moves into that, we should see the value stabilise.”
Hardware vs. software
“We had Hardware sales up 6.5 per cent. If you were to exclude TVs – just to give an example of the strength of the other categories – we would have been up 11.5. We continue to see good growth in Computers and IT, Cameras and Telecommunications.
“Software was -4.9 per cent on a total basis and -10.8 per cent on a comparable store basis. This is broadly in line with what we’re seeing in previous years.
Winning and losing products
Mobile: “Something like the iPhone 5, that’s been great, along with the Samsung Galaxy products which have been fantastic as well.
Consoles: “The Wii U was launched in November. It hit our expectations at launch, there’s no doubt about that. It then settled down fairly quickly just to be an okay performer as we went through. We did see in September and October with the PS3 and Xbox, Sony and Microsoft repositioned their consoles down, by between $50 to $100. So we’ve actually seen very good unit growth in consoles. The units didn’t quite offset the dollars, but still some great unit growth.
Windows 8: “It definitely hasn’t been a failure, that’s for sure. It’s been good in the sense of a growth post-launch. The issue with Windows 8, if you can call it an issue, is that at launch…we didn’t have enough of that new form factor that really makes the most of Windows 8, which is a lot of the touch screens, sliders, convertibles, transformers – whatever the vendors call them – that enable you to tack a screen on or fold the screen down to act more like a tablet. That was lacking at launch, and that’s all really starting to flow through now.
iPad mini: “A great product and there was talk that it was a failure – but as I’ve said before, you’d love more failures like that. If we could have got the stock we wanted, it would have been a different result in December that’s for sure.
Slow sales in the lead-up to Christmas
“While December was slightly softer than we anticipated – and I must say, if we could have gotten all the mini iPad stock we wanted, or we forecast, we wouldn’t have had a problem – the real pressure on comparable store sales came from the September and October periods.
“Both of those months had weaker-than-normal run rates in Visual sales. And September had a similar situation with Software being weaker than the normal run rate.
“In October, sales were heavily impacted by the upcoming launch of Windows 8. This saw a combination of suppliers limiting supply of the Windows 7 machines, plus consumers holding back as they waited for the platform. Similar to what we see with any product launch, there is always that vacuum created as people wait for the new product. This resulted in very soft computer and associated accessory sales.
“Our NOW music service continues to grow steadily. We’ve got around 25,000 active users on that site, we’re close to 12,000 fully-paid subscribers. And we’re just seeing music subscription is slowly gaining awareness and it will continue to grow in popularity over time. Importantly, that whole platform will provide growth opportunities to expand into other categories – you will see some of those over the course of this financial year.”
JB Hi-Fi Home
“Early sales have been encouraging with good growth in the appliance categories and, I’ve got to say, it’s ahead of our internal expectations. The concept appears to be positively accepted with no negative impact on the traditional JB categories. We’ll continue to review and refine the offer over the remainder of this financial year before deciding on the next steps.