The premium audio and CE markets are holding up according to distributors Sound United and Audio Active.
According to several distributors that ChannelNews has spoken to the market is “coming back” after two slow months earlier this year.
According to Philip Newton the CEO of Sound United Australia “demand is steady and certain brands are showing growth particularly at the top end”.
The issue according to one supplier is stock, “Harvey Norman is still trying to clear old stock so it’s hard to get new stock into the channel”.
Currently old stock Sony and Samsung TVs are being sold at “thousands of dollars off the price of new models and this makes it hard when it comes to shifting new models” claims a Harvey Norman franchisee.
This morning JB HI Fi stock is up nearly 2% despite a small fall in sales in the last quarter.
JB Hi Fi management claim that a gain in market share is helping to cushion a slowdown in sales in February and March,
Yesterday JB Hi Fi reported that sales for the third quarter fell 0.1 per cent on a same store basis across 199 JB Hi-Fi Australia outlets. I
n New Zealand, JB Hi-Fi March quarter sales were up 10.8 per cent, while sales at The Good Guys whitegoods chain fell 3.8 per cent.
JB Hi-Fi CEO Terry Smart has been conscious of the stock levels the business has been carrying and the risks associated with running “overstocked inventory”.
This has led to several suppliers who were forced to order 12 months out during COVID and due to component shortages now carrying large stock levels in Australia.
“One major JB Hi Fi supplier told ChannelNews that “As a direct result of demands by head office we now have 18 months of supply that we have to shift, and this could lead to continued discounting”.
Some insiders are tipping higher margin for retailers as incentives to move stock being held by suppliers.
Smart claims he is happy with the trading results in the period, with sales well above pre-pandemic figures.
“As anticipated, sales growth has started to moderate from the elevated levels seen in the first half of FY23, but the group’s trusted value-based offerings have continued to resonate with our customers and grown market share,” he said.
In the six months to December 31, sales were pushed higher by 8.6 per cent to $5.3 billion due to bumper revenues at the Black Friday sales and before Christmas.
A big benefit for JB Hi Fi is that they sell into a youth market who are less exposed to mortgage rate increases.
Shaun Cousins, head of consumer research at UBS, told the AFR that JB Hi-Fi remained popular with Australian consumers. “[The company] enjoys a strong value proposition with consumers and a young customer base, while having market share headroom in the telco category,” Mr Cousins wrote to clients.
“Despite limited new store growth and an online offer that is well positioned versus peers, we are now more confident in the JB Australia growth profile due to a greater focus on market share gains.”
Mr Cousins said trade feedback suggests these gains have accelerated, and he is also more confident the cost focus within JB Hi-Fi stores, despite its lean cost base, positions it well to manage margin compression in a slowing consumer environment. The Good Guys was more exposed to a slowdown but remained a market share winner, he added.
“[The Good Guys] was well-positioned leading into COVID with improvements to merchandising, range and selling under [JB Hi-Fi] CEO Terry Smart, enabling it to expand EBIT margins significantly and gain disproportionate market share during COVID,” he said in a note.
He added that same-sales growth at The Good Guys had outperformed Harvey Norman’s local franchisees, and it was likely the JB Hi-Fi owner chain was taking market share from its rival retailer.
