JB Hi-Fi Group has reported a sales slowdown for the month of January with total sales growth of 2.5% for JB Hi-Fi Australia compared to 4.3% in the year prior with flat sales for The Good Guys.

“While we are pleased with the January trading result with sales continuing to be well above pre-Covid January 2020, we have seen sales growth start to moderate from elevated levels seen in the first half of FY23,” JB Hi-Fi Group CEO, Terry Smart said.

“It is difficult to compare January 2023 to the year prior when there were a lot of challenges relating to stock. At the same time, we acknowledge that the growth we saw in the first half of the financial year will be difficult to achieve in the second half because we are cycling through such a significant period.”

According to JB Hi-Fi Group chief financial officer, Nick Wells, good quality stock will help maintain sales growth moving forward. “Any aged or old stock has been sold over the last two years so the stock we have on hand today is all new stock. The quality of stock is good and fresh, so it is resonating well with customers,” he said.

Smart said customers are also being drawn to retailers they can trust. “When it comes to consumer electronics and technology, JB Hi-Fi is positioned to pick up that demand, while The Good Guys experiences solid growth in the home appliance category as customers focus on value products.

“As spending tightens, we will continue to remain competitive. When it comes to cost of doing business (CODB), we have always been a lean business, so it is difficult to cut back. Since pre-Covid, we have seen our ratio of casual staff increase which means more flexibility with rosters. However, we will always stay focused on the customer. I’d rather have slightly higher CODB than cut our service levels too much.”

Addressing the increase in gross margin for both JB Hi-Fi Australia and The Good Guys, Smart expects more discounting on the shop floor as stock starts to return to normalised levels.

“We could see elevated margins return to more historic levels, particularly for JB Hi-Fi. There has been some structural changes in The Good Guys and their buying terms. However, we do expect to give a little bit of that back as we see on-floor discounting grow,” he said.

“The feedback from suppliers is that we won’t be seeing any further price rises because stock levels are returning to normal. We also expect suppliers to be fighting for share against their competitors just as much as retailers.

“Promotional activity has intensified in line with good stock availability and tighter consumer spending. We suffered some challenges with phones in December, but those products are now back in stock. We will continue to push hard in phone and TV categories and suppliers are willing to support us. There are a lot of supplier-funded promotions coming through.”