Home > Latest News > The Good Guys Set To Be A Major Threat For Both JB Hi Fi & Harvey Norman Claims New Report

The Good Guys Set To Be A Major Threat For Both JB Hi Fi & Harvey Norman Claims New Report

The pressure on Harvey Norman is “Intensifying” while The Good Guys is set to become an even more aggressive appliance retailer when sold, according to a new Citi retail report.

They said that Harvey Norman is set to come under pressure from any potential new owner of The Good Guys and an expansion of JB Hi Fi.

The report said that the appliances tailwind for electronics retailers is fading – While the fundamentals of the appliances category remain sound, competitive and cyclical

headwinds are emerging for retailers.

ChannelNews has been told that a proposal for JB Hi Fi to acquire The Good Guys has been submitted to the Australian Competition and Consumer Commission and that a decision is set for early August.

This has not stopped Citi Equities recommending a sell down of JB Hi Fi.

They also claim that the current Harvey Norman, share price does “not reflect earnings risks”.

Described as a highly mature and cyclical retailer Citi believe that Harvey Norman is facing renewed competition in appliances, while also gradually shrinking its network.

They said that the acquisition of The Good Guys by JB Hi-Fi also comes with “risks”

They said that recent cyclical tailwinds such as a housing downturn is “unlikely to support the appliances category as much as they have over the past 12 months”.

The report added that if The Good Guys is not acquired, a listed, recapitalised and corporatised Good Guys is likely to grow stores and sales materially, taking share from JB Hi-Fi and Harvey Norman.

“A JB Hi-Fi acquisition of The Good Guys would be operationally complementary, fast-tracking their strategic move into appliances”.

Citi claims that the proposed transaction contains significant execution risk and completion is not yet a likely outcome. “In our view, it is premature for JB Hi-Fi to be viewed as a likely winner out of the sale of The Good Guys”.

More on this report tomorrow.

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