JB Hi-Fi downgrades profit guidance

Amid challenging market conditions.

JB Hi-Fi has downgraded group profit for FY18 due to soft sales in The Good Guys business, attributed to unfavourable weather conditions and heightened price competition in the home appliance market.

The company now expects group profit to be circa $230 million, down from its previous guidance of $235 million to $240 million.

“Whilst the challenging conditions in the home appliance market are expected to impact performance in the short term, we remain confident in the group model and the medium and long term outlook for The Good Guys and JB Hi-Fi,” the company said in an investor presentation.

The company assured that the JB Hi-Fi business continues to perform strongly and in line with expectations.

Q3 FY18 sales growth was 6.8% with comparable sales growth of 4%. However, these figures were down on Q3 FY17 (10.8% sales growth and 8.2% comparable sales growth).

In comparison, The Good Guys sales declined 1.3% in the quarter with comparable sales growth down 2.9%. In Q3 FY17, sales growth was 2.6% and comparable sales growth was 1.2%.

Key focus areas for JB Hi-Fi for the 12 months ahead include a category evolution in PC gaming, connected technology and home automation and communications, as well as an expansion of services and e-commerce platform migration.

For The Good Guys, focus areas include improving visual merchandising standards, implementing revised commission structure, increasing supplier engagement, improving delivery options, as well as store relays (focus on adjacencies, improved traffic flow and core home appliance categories) and a continued focus on sales and increasing ASPs.

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