JB Hi Fi On A Roll So What’s Next In 2020?
JB Hi-Fi is on a roll and I am predicting that the consumer electronics and appliance retailer is set to report a record result for the last quarter and excellent growth in 2020.
So, where do they go from here?
Consumer electronics is all about evolution and what eventuates due to further development of a processor wrapped around clever design which is what we saw at CES 2020.
JB Hi Fi will benefit from this progress with the introduction of new products inside categories they already sell including new accessories such as power banks and accessories, TV’s and a new generation of sound gear.
We will see new HD networked sound systems, 8K TV’s and the introduction of new gaming PC’s as well as new mobile products such as the Galaxy Book S which will be in stores shortly. Also coming are new smartphones a category that is delivering growth along with associated products such as wearables.
In 2020 the Company will expand further into Connected home products as well as new wearables and several new categories spanning health tracking right through to products for mothers with children.
More health sensors are coming to consumer products and JB Hi Fi will benefit as consumers upgrade.
These sensors help consumers better understand their body and the state of your health.
As someone said at CES 2020 “The level of information that one can get from today’s consumer health products would have cost thousands of dollars and an appointment with expensive specialists five years ago”
Some of the new products that JB Hi Fi could be selling includes an electrocardiogram, photoplethysmography for optical heart rate, SpO2 for blood oxygen and deeper sleep analysis that can detect sleep apnea.
Then there are devices that can automatically track calorie intake (i.e. the number of calories your body absorbs and can detect your stress level based on skin readings using similar technology to what’s used in lie-detector tests.
While smartphones and watches have had blood pressure-sensing for several years JB Hi Fi could soon be selling earbuds, which could be used to help fight hypertension, the world’s most widespread undiagnosed condition.
Or products to measure blood sugar levels.
Foldable devices from a new Motorola Razer to a new foldable Samsung device are set to go on sale.
Intel showed off what they are calling the ‘Horseshoe Bend’ which is essentially a 17-inch tablet or an all-in-one computer that can fold into a 12.5-inch laptop with a touchscreen on one half and a touch keyboard and touchpad on the other.
Also coming is a brand new in car dashcam from a UK Company called Nextbase, their 622GW 4K Dash Cam, delivers 4K HD recording as well as the ability to make an Emergency SOS call if it realizes you have had an accident.
It also has Alexa Built-In (also available in other Series 2 models) as well as what3words integration, Enhanced Night Vision, Extreme Weather Mode, Digital Image Stabilization and 5GHz Wi-Fi.
It is these sorts of products in the consumer electronics market where the big retailer will generate revenue and profits as technology becomes a key part of our lives.
Today their shares have risen to $41.20, 12 months ago during CES 2019 they were $20.60 with some analysts recommending a sell.
This is an all-time high, for the bricks-and-mortar retail store who is also taking it right up to Amazon online for the simple reason that consumers trust JB Hi Fi and they are matching the big US retailer online when it comes to price.
Back in 2016 the then Fairfax Media now owned by Nine Entertainment predicted that JB hi Fi earnings could fall by as much as 23 per cent. This was ahead of the arrival of Amazon.
They even predicted that JB Hi-Fi’s sales could fall as much as 6 per cent when Amazon entered this market.
Citigroup’s Bryan Raymond who fancies himself as a leading retail analyst slashed its long-term earnings forecasts for JB Hi-Fi more than 40 per cent costing his client potentially millions.
At the time he was banging on that Citi’s so-called proprietary surveys indicated Amazon’s prices were set to be 15 per cent lower than those at the likes of JB Hi Fi, it never happened.
He said that in three major categories – tablets, telco and headphones the average selling prices would need to fall about 10 per cent to narrow the price gap to about 5 per cent at Amazon, again it never happened.
Raymond said at the time “This will likely drive 7 per cent to 11 per cent declines in sales productivity and about 180 basis points to 250 basis points declines in EBIT (earnings before interest and tax) margins over three to four years,”.
This also did not happen.
In the last financial year (FY19), the company delivered some solid results.
Net profits were up 7.1% to $249.8 million while total sales rose 3.5% to $7.1 billion. Even better for the Company was that online sales, which saw a 23% increase on the prior year’s numbers are continuing their upward spiral and I suspect that the next lot of numbers will see a further improvement.
This year the company is also set to see a turnaround in the white goods market after they acquired The Good Guys, Terry Smart the CEO has spent the past two years fixing up problems left behind by his predecessor Michael Ford who is now running Greenlit Brands which was formerly called Steinhoff International, they changed their name because of the stench of being associated with their scandal ridden and corrupt parent Company.
JB Hi-Fi moved into the whitegoods markets 3 years ago when other retailers didn’t see the threats from the rise of online shopping as clearly – a move that is paying dividends today, while sales at TGG have been flat 2020 could see a turnaround as brands such as Sharp introduce new purifiers and convection cooking and brands such as LG devices that allow one to grow fresh herbs.
JB Hi-Fi shares offer a 3.45% dividend, which comes fully franked.
Who knows what challenges 2020 will bring for JB Hi-Fi, but if its past is anything to go by, I wouldn’t be too worried investing in this Company with retailers management at Best Buys In the US praising the management skills of our local consumer electronics retailer.