JB Hi Fi Ready For Amazon As Online Sales Grow 38%
JB Hi-Fi who is currently refurbishing several of their stores with a greater emphasis on instore displays, is banking on smartphones to deliver growth in this quarter according to CEO Richard Murray.
The Company who saw sales grow 10.9% in the last financial year to $4.15 billion claims that they are “ready to compete up against Amazon”.
During the last financial year online sales at JB Hi Fi grew 38.4% while at The Good Guy which was acquired by JB Hi Fi last year online sales grew 5.1% to $64.4 million.
Richard Murray told ChannelNews that the Company has made significant investment in their online business during the past year. “We constantly evolve our stores and we need to constantly evolve our online operations he said”.
He said that the Company is currently testing new online systems that will deliver improved services for their online customers. “We have some new delivery choice options coming along with expanded back end infrastructure” he added.
4Square Media who has a commercial relationship with JB Hi Fi is now working with The Good Guys and their marketing team to deliver additional information inside SKU’s using our Webcollage content engine.
In 2018 we will also deliver for The Good Guys customers, a new version of Plug magazine a free interactive digital magazine that will focus on appliances and consumer electronics information.
Among the products that JB Hi Fi are banking on to deliver growth in their smartphone category, is the Samsung Galaxy 8, Note 8 and Apple’s iPhones 8 and X, as well as the Google Pixel 2.
At The Good Guys the Company is expanding their consumer electronics offering as well as expanding further into branded products.
Total sales at JB Hi-Fi stores rose 6.2 per cent in the year to date, compared with growth of 8.8 per cent in July and 14.3 per cent in the year ago period. Same-store sales rose 3.2 per cent, compared with 5.8 per cent in July and 10 per cent in the year-ago period.
At The Good Guys, which was acquired in November 2016, total sales rose 3.1 per cent in the year to date after surging 6.8 per cent in July, while comps were up 2.4 per cent after growing 5.7 per cent in July.
Murray said that sales at The Good Guys was up 0.2% to $1.26 billion while comparable sales were down 1.3%.
Currently TGG is clearing older stock ahead of new stockand brands being ranged in their stores. The Company will also start selling Dell Computers.
At the end of FY17, the Group had 303 stores in Australia and New Zealand. In Australia, six new JB Hi-Fi stores were opened and in New Zealand one new JB Hi-Fi store was opened. On acquisition of The Good Guys, we acquired 103 stores. Since acquisition, one new The Good Guys store has been opened and two have been closed. There were 102 The Good Guys stores open as at 30 June 2017.
Murray said that he is confident that group sales will rise about 21 per cent this year to $6.8 billion, with JB Hi-Fi sales expected to reach $4.65 billion and The Good Guys $2.15 billion.
However, he acknowledged that JB Hi-Fi was cycling 10 per cent growth in the year-ago period.
“Our feedback suggests the major product release in the period [iPhone 8] has not driven sales growth as shoppers hold off for the iPhone X, to be released in Australia in late 2017 or early 2018,” he said.
Mr Murray confirmed that synergy benefits from the acquisition of The Good Guys were expected to come in at the upper end of JB Hi-Fi’s $15 million to $20 million target and would be fully realised in 2019, one year earlier than anticipated.
“Any upside to our original target will be reinvested in the businesses to strengthen their competitive position and drive future growth,” he said.
JB Hi-Fi has issued no profit guidance for 2018, but based on changes in remuneration policies, earnings will have to grow by between 23 per cent and 34 per cent for senior executives to achieve short-term incentives.