JB Hi-Fi’s Richard Murray Talks Shares, New CEO, Supply & Future For Retailer
Richard Murray the former Group CEO at JB Hi Fi has said that he is set to keep his shares and that he has “great confidence” in the management team that is now being led by Terry Smart the former CEO of The Good Guys.
Murray is also bullish about the future for JB Hi Fi he said that he is “constantly impressed” at how Australians have kept shopping and embracing new technologies during and after COVID-19 lockdowns.
A key architect of the Retail Association Murray said at the Macquarie Australia Conference that the $320 billion retail sector was in a great position to benefit from a strong domestic economy going forward. Murray said he believed sales could remain strong, despite the pandemic boom in sales of what might have been considered one-off items such as TVs and whitegoods.
Last week Murray announced he will leave JB Hi-Fi after 18 years to join billionaire Solly Lew’s Premier Investments as its new CEO,
On the issue of supply and increased shipping costs Murray said that obtaining products from offshore suppliers “had its complexities” but as yet JB Hi-Fi was not facing any supply issues.
Some observers claimed that consumers made large purchases during the COVID-19 lockdown and wouldn’t need to buy more, he said.
“My friends and family haven’t got that memo because they seem to still be shopping, and I am constantly impressed at our Australians embrace consumer electronics, technology and home appliances – and all for a variety of different reasons.
“I think suppliers are putting out compelling product, obviously customers need the money to spend and the reality is as we have said many times before, and I am going to repeat it, we have gone into a tonne of detail of how we go to market … the reality is we are a big company and if consumers are in a tough spot, it gets harder, and if consumers are in a good spot, it’s easier – and at the moment consumers are in a good spot.
“And obviously the outlook is for this quarter, we had some big numbers to cycle from last year and that has been well telegraphed, but as we look out for the next 12 months, I think the economy is in great shape for all retailers, I’m hoping, so I think both JB Hi-Fi and the border retail sector has a lot to achieve.”
Mr Murray said there was plenty of “chatter in the market” about supply constraints, but he was pleasantly surprised that products have been arriving just in time. “I would always like more, but we get enough.”
However, suppliers were sending “mixed messages” about supply issues and there were bumps in the road and some complexities to obtaining product.
The Australian reported that JB Hi-Fi had recently opened its stores to accepting a range of buy now, pay later platforms such as Afterpay and Zip and Latitude Pay, which Mr Murray said was a reaction to consumer demand.
“Everything we do we are very focused on the economics for us as a business, we create a lot of value for suppliers, and so fair to say when the four of us (management) sat down and we worked through this with our buy now pay later partners we were comfortable for the metrics for JB Hi-Fi but also putting the customer at the heart of your business we were able to balance what we are hearing from customers and their desires to use these new payment platforms and the economics for us.”
Murray also revealed that JB Hi-Fi is seeking to reduce rent at underperforming stores and cut back-of-store costs.
While same-store sales at JB Hi-Fi shops rose 11.5 per cent in the March quarter and by 22 per cent in the December quarter, traffic at some outlets in shopping centres fell and sales at airports were “quiet” he said.
“We’ve always been a desirable tenant but you can imagine at the moment some stores have less traffic than they once did and obviously we will engage with landlords when leases come up,” Mr Murray said, suggesting the retailer would seek to negotiate rents that more appropriately reflected sales and foot traffic.
“We’re very focused on keeping the portfolio productive and our rent expense is a big part of [that],” he said. “We continue to understand the value we create for a landlord in their centre.” he added.
Mr Murray indicated JB Hi-Fi was unlikely to close stores as more customers started shopping online, but at the same time it was unlikely to open new stores at the same rate as it did in the past.