Home > Industry > Appointment & Jobs > CE Retailers Shift Stock As After Easter Uncertainty Takes Hold

CE Retailers Shift Stock As After Easter Uncertainty Takes Hold

Consumer electronics and appliance retailers are moving to shift millions of dollars’ worth of stock sitting in empty stores to online warehouses, one retail group has also moved to facilitate internet delivers in local neighbourhoods from the closed stores in an effort to reduce stock inventory during the COVID-19 shutdown.

Last week JB Hi Fi closed stores in some CBD areas while Harvey Norman has closed some stores in shopping centres.

Also set to be hit are retailers such as Bing Lee and Betta Electrical. Radio Rentals parent company, Thorn Group, announced that it had closed all 62 Radio Rentals stores around the country until further notice.

The Radio Rentals online store will continue to operate throughout this period with back office customer service functions operating as normal.

From midnight on Sunday all shops not providing essential services or goods were closed down in Davenport Tasmania, including Kmart, Target and Harvey Norman.

The move comes as concerns are raised as to when Federal and State Governments will be considering lifting restrictions a move that would see several retailers be able reopen stores next month.

If it’s down to Government paid employers, it appears that it won’t be in the near term with Chief Medical Officer Professor Brendan Murphy claiming it is still too early to relax strict social distancing rules.

He claims Australia is in a good place in the fight against coronavirus but must maintain the pressure on safe isolating.

Former Prime Minister Tony Abbott told ChannelNews that the Country could face a “financial disaster” and that retirees are seeing their savings “eroded due to the closing down of business in Australia.

It appears that the former Prime Minister who predicted the possibility of a Pandemic back in 2005 when he was Health Minister had been running the Country when COVID-19 hit Australia could be going down the same route as Sweden when social distancing has been left to individuals and business and jobs are still intact.

In the face of criticism and incredulity from its European neighbours, Sweden has stuck to its guns on resisting an Australian style lockdown of its 10.2 million citizens to avoid the spread of COVID-19.

The government has advised Swedes to work from home when possible and avoid crowded places like bars and restaurants, but it has stopped short of imposing formal restrictions, urging its citizens to “behave like adults” rather than fining them for leaving their homes without good reason.

Nevertheless, the approach has been popular with Swedes, with the ruling Social Democratic Party seeing a bump in the polls since the crisis began.

Stefan Löfven, Sweden’s prime minister, has stressed that far from being COVID-19 denialists, his government are simply following the advice of the country’s health authorities.

Treasurer Josh Frydenberg has warned it would be dangerous and unrealistic to remove social distancing restrictions too soon.
Mr Frydenberg says the measures will stay in place for as long as it takes.

“The scale of measures in place is something we have to review … but not now, in a few weeks,” Murphy told ABC radio earlier today.

The shutdown of CE and appliance business is set to hit the future profits of retailers such as Harvey Norman who is witnessing a major downturn in furniture sales as well as JB Hi Fi and The Good Guys whose shares were up 7.2% on Friday to $33.90.

UBS analyst Ben Gilbert has forecast that profit forecasts for JB Hi-Fi and Harvey Norman have been slashed by as much as 37 per cent. He claimed that JB Hi-Fi profits will be down by 2 per cent to $267 million in 2020 and by 23 per cent to $219 million in 2021 and predicts that Australia’s largest consumer electronics retailer will suspend its final dividend this year and its interim dividend next year to preserve cash.

He also claims that Harvey Norman profits will slump by 20 per cent to $284 million this year and 37 per cent to $240 million next year.

He believes that Harvey Norman will be hit harder because they are exposed to a fall projected fall in the housing market and due to the fact that a large percentage of their revenue comes from furniture sales.

ChannelNews has over a 20-year period asked Harvey Norman executives for a breakout of their revenues by category, but they have refused to supply data.

Gilbert believes the positive effects will last another month before same-store sales decline sharply.

In his report he wrote “We expect COVID-19 to be a significant (short-term) drag on the housing sector, characterised by falling house prices (down 15 per cent peak-to-trough), weaker completions (down about 25 per cent year on year) and falling turnover [down 10 per cent year on year due to restrictions on auctions and open homes],” Mr Gilbert said in a report on Wednesday.

“We believe this combined will result in an 8 per cent headwind to household goods sales in 2021,” he said.

He claims that as a result of the COVID-19 pandemic JB Hi-Fi’s and Harvey Norman’s like for like sales were likely to fall between 11 and 15 per cent in the first half of 2021.

The actual decline in household goods sales could be much greater, Mr Gilbert said. Many retailers are closing their bricks-and-mortar stores, which account for about 80 per cent of industry sales, unemployment is expected to rise, and as house prices fall, consumers are expected to cut back on overall consumption.

Gilbert believes both JB Hi-Fi and Harvey Norman have enough balance sheet strength to withstand the downturn, without raising equity, and are well placed to take market share when the market recovers.

UBS upgraded its recommendation on JB Hi-Fi and Harvey Norman to buy.

You may also like
V Zug, Sub Zero & Gaggenau The Hot New Premium Appliance Brands In OZ
Retailers Turning To AI To Predict Sales & Stock Levels
Cellnet Getting Record Orders For New Temperature Control Smart Mugs
Heads Set To Roll At Harvey Norman After Massive Online Crash, As Chairman Slams Critics
Smartphone Growth Coming Back ASP Rising Claims IDC