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CE Market Growing As Analysts Praise JB Hi Fi Debt Levels

Demand for consumer electronics is still strong according to several retailers that ChannelNews have spoken to with analysts praising JB Hi Fi debt level management ahead of the big holiday season spending period.

At today’s launch of the Galaxy Fold Gary McGregor the VP of Mobile at Samsung said that “innovation” was driving sales. He cited the “highly successful” launch of Samsung’s A Series of smartphones as a classic example of a product range that has been targeted at and succeeded in the value category Vs the premium smartphone market where Samsung traditionally play.

Talking about the smartphone market where retailers such as JB Hi Fi have been growing market share he said that Samsung has had a “phenomenal” year, but he warned that the market was now saturated with some predicting limited “if any growth” during the next six months.

He also pointed out to ChannelNews that all Samsung smartphones were “certified for the Australian market for all individual carrier networks as well as the Open Channel”.

His comments come as several Chinese brands move to dump phones not certified for the Australian market exposing consumers to higher levels of radiation and poor 4G reception due to the lack of network capability across band 28 which is essential for good 4G performance.

Earlier today Super Retail reported comparable sales growth of 3.2 per cent in the first 16 weeks of fiscal 2020.

Total sales were up 4.2 per cent, the retailer said while describing the start to the year as “solid.”

Retail consumer sentiment is mixed, the firm said, noting it introduced higher levels of promotional activity across its business to respond to a cautious consumer.

That generated top-line sales growth, Super Retail said but has “adversely impacted” margins. The firm emphasised that first-half results will be highly dependent on the Christmas trading period.

It’s holding an investor day on November 8 but said that there will be “no major deviations” from its current course and will look to build on the strategy it outlined in May.

Last week Harvey Norman who are moving to handle their debt levels with a capital raising saw their Chairman Gerry Harvey have to come to the rescue after the raising fell short of what Harvey Norman wanted.
Analysts who have been looking at current retail debt levels have reported a positive outlook for JB Hi Fi.

Simply Wall Street wrote in one report “JB Hi-Fi’s interest cover suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14’s goalkeeper. And that’s just the beginning of the good news since its net debt to EBITDA is also very heartening. When we consider the range of factors above, it looks like JB Hi-Fi is pretty sensible with its use of debt. That means they are taking on a bit more risk, in the hope of boosting shareholder returns”.

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