JB Hi-Fi shares fell 10.71% to $72.96 at noon today after the retailer’s record FY26 result fell short of analyst expectations, with Group CEO Nick Wells defending the numbers and confirming the Company will take its premium appliance chain e&s national to go head to head with a recapitalised Winning Group.

The Group reported record sales of $11.06 billion, up 4.8%, but the figure came in below market expectations of $11.1 billion. Statutory EBIT rose 5.8% to $734.4 million, short of consensus of $740 million, while NPAT climbed 6% to $489.9 million. The total ordinary dividend was lifted 22.5% to 337 cents per share, with the payout policy formally raised to a 70% to 80% range of NPAT.

Jefferies analyst Michael Simotas described the result as “uncharacteristically weak”, with questions raised over how the Company’s most recent acquisition, e&s, is tracking.

Talking to ChannelNews, Wells said the Company had the skill and expertise to compete and grow in what he admitted was a tough market.

“We do well in a tough market,” he said. “I am confident that we will come out stronger and in better shape.”

e&s Going National Against Winning

The result revealed a sales fall at e&s, which posted total sales of $273.1 million. On a comparable full-year basis, sales fell 0.2%, with comparable sales down 3.2%, and the business recorded an EBIT loss of $0.4 million as it continued investing in stores and its Commercial division.

Wells said the losses reflected investment ahead of expansion. “A lot of work is being done in the backend ahead of a national rollout,” he said. “Very shortly we will start to expand it and we will definitely go national at the same time as Winnings.”

He conceded the market downturn was not planned for, with the business exposed to the renovation and construction market.

“We are confident that we will be able to deliver a national network of premium appliance e&s stores. The impact on the market is a problem and it makes the move more challenging, especially as the business is exposed to the renovation and construction market,” he said.

“So whilst that macro perspective might be a bit harder, we will simply focus on what we can control, and we’ve got plenty of upside that we can deliver, and we are confident of the outlook we have for the business.”

Board Shake Up

Compounding the result was the retirement of founder Richard Uechtritz from the board and the appointment of former Group CEO Terry Smart, who is regarded as one of the most experienced retailers in Australia and a major asset to the Company.

Smart backed the man who succeeded him, describing Wells as an “excellent CEO” and the right man for the job ahead.

According to Smart, the market conditions are “nothing new, we have seen them before and we just need to keep a level head”.

Wells also shut down analyst speculation that JB Hi-Fi Australia boss Cameron Trainor was set to retire. “Cameron is going nowhere, he is doing a great job,” he said.

Wells also pointed out the strenth that Smart brings to the board in what is seen as a one out one in strategy of season and experienced board members that will help him drive the business going forward.

Supply Problems Hit Gaming, Consoles, Computers And Apple

Wells warned that suppliers continue to push prices higher and that stock availability shortages in technology categories, particularly gaming and computers, remain a key issue.

Apple is among the brands struggling to keep up. “We have seen really strong demand for their products but even they admit that they are struggling with supply issues,” Wells said. Apple recently flagged memory as a key problem, resulting in supply constraints and a rising cost of goods.

Wearables, Audio And Vinyl Growing, TV Slows

Wells nominated wearables and health and fitness as key growth categories. “The growth is coming from rings to activity trackers to glasses and right across the whole category,” he said, adding that JB Hi-Fi is seeing AI and new technology emerge in health and wellness.

While TV sales have slowed, consumers are flocking to JB Hi-Fi stores for retro CDs, vinyl and record players, and audio remains strong.

“People are buying multiple different pairs of headphones depending on what they’re using them for. So it is still a category that we’re seeing growth and one we are excited about,” he said.

The Numbers

JB Hi-Fi Australia sales rose 4.4% to $7.42 billion, with comparable sales up 3.2%, driven by computers, mobile phones, fitness, small appliances and information technology. The Good Guys saw softer sales growth on the back of a weaker home appliance market.

JB Hi-Fi New Zealand was the standout, with sales up 26% to NZ$499.5 million and comparable sales up 15.3%, with the Company noting the economy is improving across the Tasman following a sharp slowdown in 2024.

Margins tightened across the Group, but Wells said JB Hi-Fi’s low cost of doing business remained a competitive advantage thanks to an ongoing focus on productivity gains.

Trading in July was mixed, with sales down 0.5% at JB Hi-Fi Australia stores but up 20.9% in New Zealand. Sales growth at The Good Guys and e&s was also lower in July.