JB Hi Fi Shares Do A Runner As Other Retailers Collapse
While several retailers are calling in the administrators, JB Hi-Fi shares have done a runner climbing 3.9% to $41.360 in early trading today.
Goldman Sachs said that their 1Q20 trading update delivered an “Upside surprise” and that demand for consumer electronics at the big retailer had been robust.
The sentiment is supported by brands who have reported “excellent” sales during the last quarter. The problem ahead according to analysts is the falling Australian dollar and the lack of supply due to the Coronavirus sweeping China with many CE and appliance manufacturing plants closed down by Chinese Government Officials.
Goldman Sachs in a report to investors said that extreme weather conditions and poor air quality in the country are likely to have been positive for the sale of seasonal products as well as products like air purifiers.
“We expect 1H20 comp stores sales growth to be at +3.3% in JBH Australia and +3.5% in New Zealand. While we expect growth to be flat in The Good Guys, we forecast EBIT margin to expand by +45bps” they wrote.
“Overall, we expect 1H20 EBIT to be at A$249mn, ahead of consensus estimates at A$244M”.
Some analysts are claiming that all the consumer electronics and appliance retailers should curtail discounting, consolidate stock a move that will “increase profitability” as supply becomes difficult because of the production problems in China.