JB Hi Fi Founder Claims There Is Only Room For A Select Few In OZ Online Market
Richard Uechtritz the man who led the buyout of JB Hi Fi back in 2020 believes that there is only space in the market for a select group of online retailers, as the market gets set to digest a changing marketplace due to inflation issues and tipped interest rate rises.
Several online retailers who boomed during COVID lockdowns are today bleeding share value.
During the past six months Temple & Webster shares have fallen 55% to $5.47, Kogan is down 60% trading at $3.80 today, also struggling is Catch who was acquired by Wesfarmers whose share value has fallen 16% during the past six months, they also own Bunnings, Officeworks, Kmart and Target.
Among those online retailers who Uechtritz claims have a place in the Australian CE and appliance online market is Amazon, who unlike Kogan have been able to grow their share of the Australian market since they launched their Australian operation three years ago.
Uechtritz claims Australia’s 25 million population as being a problem when it comes to scale and profitability for online traders.
He said “JB Hi Fi and Harvey Norman are among the strongest consumer electronics and appliance retailers in the world today because people trust these brands. JB Hi Fi and The Good Guys online operations are in an excellent position, however with a population of only 25 million there is not a big enough market to support multiple online retailers”.
Prior to taking over the JB Hi Fi retail chain he established, Rabbit Photo and Smiths Kodak Express.
He was also the CEO and Managing Director until his resignation from these positions in May 2010.
During this first ten-year period he transformed JB Hi Fi from a small seller of audio and consumer electronics products in Melbourne to a national chain.
During this period Terry Smart was the CFO and Scott Browning the Marketing Director who helped establish the branding that is still used today.
Uechtritz re-joined the JB Hi-Fi Board in April 2011 he is also a Non-Executive Director of Seven Group Holdings Limited.
Terry Smart who is today the group CEO of JB HI Fi claims that having the right management in place that can respond to changing conditions in the market is critical.
During the past six months JB Hi Fi’s share value has risen 5.09%.
According to Smart the business is in an excellent position to weather any changes as both The Good Guys and JB Hi fi have a healthy “Replacement” business.
“Technology and appliance are today a basic product in people’s lives, and we are in an excellent position to sell them a new replacement product whether it be a notebook, appliance or a mobile phone.”
“It’s important that we get the price right while offering them value on the products they are looking to replace.”
As for the impact of rate rises or falling property prices Uechtritz said “Some people will feel they are less wealthy however the market for consumer electronics and appliances is still strong, JB Hi Fi is still strong and that’s down to good management.”
Over the last 90 days, JB Hi Fi stock is up 4.5%. According to some analysts the fair value of their stock is estimated to be around AU$62.50,
“This is not to be taken as a buy recommendation but rather should be used as a guide only” claims Simply Wall Street.
They base this on the fact that revenue has grown by 10% per annum over the last 3 years while earnings per share has grown by 30% per annum over the last 3 years.
Shemara Wikramanayake the CEO of Macquarie Australia claims that at a time when American share markets are baking in fears of a US recession –including the worst monthly performance by the NASDAQ index since 2008 GDP growth in many economies including Australia was well above the pre-COVID-19 levels.
“While many regions are still feeling the impacts from this pandemic, to varying degrees, the world generally has made significant progress in adjusting to COVID-19, and we’re seeing countries, including Australia, increasingly adapted to this new normal and living with the virus,” she said.
“Despite the difficulties of the past few years the Australian economy has improved as we all know, particularly with strong growth and about 4 per cent likely this year, and also the labour market is particularly tight now and unemployment levels are very low.
Terry Smart said “We are moving back to normality, people are back shopping in stores and this is good for the economy”.
Wikramanayake claimed “Inflation has been slower to take off here in Australia than in some regions,” she said.
“It’s become more broad-based and more deep-seated in the recent period, which is leading to a likely shift as we all know here in monetary policy in the weeks ahead”.
She does not believe that this will impact strong retailers (such as JB Hi Fi and The Good Guys).