In a tale of two retailers, JB Hi-Fi has powered into 2026 with strong growth and rising profits — while Officeworks is grappling with an 18.8% profit slump amid a controversial overhaul of its business model.

Late last year, Officeworks launched what management described as a “significant business transformation program.” The strategy has seen branded supplier products stripped from shelves in favour of expanding “house brand” ranges, alongside a shift to what executives call a “low-cost operating model.”

The result so far: profits down nearly one-fifth and a forecast $25 million hit to earnings in the second half of 2026 due to restructuring and ERP-related costs.

While revenue edged up 4.7% to $1.82 billion (from $1.76 billion in 2024), the topline growth has failed to translate into stronger profitability — raising questions about whether customers are embracing the pivot away from established brands.

Industry observers suggest consumers may be voting with their wallets, favouring trusted branded technology and electronics over cheaper or copied alternatives — particularly in categories such as AI-enabled computers, gaming, and televisions.

That’s where JB Hi-Fi is winning.

This week, JB Hi-Fi announced total sales surged 7.3% to $6.10 billion in the first half of 2026. Earnings Before Interest and Tax climbed 8.1% to $454.0 million, while Net Profit After Tax rose 7.1% to $305.8 million.

The company is capitalising on strong demand for AI-powered PCs, gaming, and televisions — key growth categories that are delivering expanding margins across the JB Hi-Fi Group, including The Good Guys.

In contrast, Officeworks’ transformation has included attempts to replicate elements of the JB Hi-Fi model — such as expanding into TV sales — even as the broader TV market softened. The move has done little to ease competitive pressure.

The leadership shake-up at Officeworks has added to the turbulence. Following the appointment of a former Kmart CEO to spearhead the cost-reset strategy, several senior executives were shown the door last year. In its latest financials, the company signalled it would “enhance talent and management capability” — widely interpreted as an acknowledgement of internal instability during the transition.

Meanwhile, Officeworks is pushing ahead with a major automated supply chain facility in Queensland to improve efficiency across stores and online operations. Management insists initiatives are “progressing well” despite the earnings slide, and says the expansion of own-brand ranges and the use of AI to drive productivity will structurally lower costs and set up improved performance by 2027.

The company has also expanded its store footprint with two net new openings and two relocations in 2025, and broadened distribution through Kmart Marketplace and a partnership with Uber Eats.

But investors appear focused on the numbers.

While Officeworks restructures and absorbs one-off costs, JB Hi-Fi continues to deliver consistent growth, strong margins, and rising profits — proving that brand strength, category leadership, and execution remain powerful differentiators in a competitive retail market.

As the battle intensifies, the scoreboard in early 2026 is clear: JB Hi-Fi is extending its lead, while Officeworks fights to justify a costly transformation still searching for payoff.