Why JB Hi-Fi is thriving during the coronavirus crunch while most other businesses are struggling to survive – as boss predicts Australians will keep spending through to Christmas
- Coronavirus restrictions saw hundreds of stores shut up shop to slow spread
- JB Hi-Fi remained open, enhancing cleaning and social distancing measures
- The move has seen sales surge with customers buying TVs and mobile phones
- The company’s full-year net profit looks to be higher than first predicted
- Here’s how to help people impacted by Covid-19
Australian retail giant JB Hi-Fi is thriving during the coronavirus pandemic as sales for home appliances and technology products surged.
While other companies are struggling to bounce back from the forced shut down in March due to COVID-19, the electronics and appliances retailer has managed to perform better than anyone predicted.
The company had expected its full-year net profit to increase by between 6.1 per cent and 8.1 per cent, between $265 million and $270 million.
But the increase in demand from customers stuck at home buying small appliances, televisions and mobile phones has seen sales growth tipped to increase by 10.8 per cent to $7.86 billion.
Net profit is expected to be 20 to 22 per cent higher, in the range of $300 million to $305 million.
JB Hi-Fi chief executive Richard Murray now believes the demand for consumer technology will continue until Christmas
Australian retail giant JB Hi-Fi is thriving during the coronavirus pandemic as sales for home appliances and technology products surge
Retailers, including Myer, Cotton On and Kathmandu, closed their doors during the lockdown as the government urged residents to remain home from March.
The shutdown resulted in a slump in sales for many retailers, leaving companies battling to stay afloat after relying mainly on online shoppers for about two months.
However, the majority of JB Hi-Fi stores in Australia remained open. The company enhanced its cleaning and social distancing measures during this time.
The elevated sales growth, combined with disciplined cost control, has more than offset the additional operating costs associated with additional health and safety measures which were brought in.
JB Hi-Fi chief executive Richard Murray believes the demand for consumer technology will continue until Christmas.
‘The economy feels in better shape than we might have thought for consumers, and housing prices seem to be in good shape – customers are spending time at home and investing in their homes,’ he told the Australian Financial Review.
‘If JobKeeper gets us through a majority of the tough times for consumers and the government can focus on specific industries that have been impacted, such as hospitality or tourism, then that’s a great outcome, because we do need to get the economy back as quickly as possible to a new normal.’
The majority of JB Hi-Fi stores in Australia remained open during through March and April, with enhanced cleaning and social distancing measures in place, resulting in high demand during the past three months
The group did feel a negative impact of COVID-19 at its 14-store New Zealand network, which was closed in March and April due to social restrictions there.
Given the impact of the temporary closure, the group is reviewing the carrying value of its New Zealand business and said it will take a non-cash impairment of $25 million in its full year accounts.
JB Hi-Fi said all New Zealand stores have resumed full trading and initial sales performance since reopening has been solid.
The retailer also reinstated and upgraded its FY20 sales and earnings guidance after withdrawing its initial forecast in March amid the uncertainty arising from COVID-19.
The group now expects net profit to be 20 to 22 per cent higher, in the range of $300 million to $305 million.
The company had expected its full-year net profit to increase by between 6.1 per cent and 8.1 per cent, between $265 million and $270 million