JB Hi-Fi electronic goods retailer is finalising its new performance strategy after reporting both a sales and profit drop in the latest financial year.
The New Zealand division of the Melbourne-based company posted a $2.7 million loss on EBIT, and has taken a 17.1 million non-cash impairment on the business, “following poor performance in the year.”
Gross margins dropped 26 basis points to 18.15 per cent, while the cost of doing business increased 156 basis points to 17.89 per cent.
The drop-in profit margins were only seen for the New Zealand store, for which there are 16, meaning the new performance strategy will be exclusive to our stores.
Ben Goodale, managing director of JustOne, highlights that the loss in margin could be attributed to consumers switch to electronic shopping.
“It’s been a challenging time for retailers in this category, margins have long been tight on electronics… JB Hi-Fi have seen their business repositioned by technology changes. Where once they would have made reasonable margins on music and games, these categories have been massively hit by downloads.”
Goodale confirms suspicions that although online can be considered a culprit for a slump in sales, it cannot be wholly to blame.
“They have to think about their own online strategy, which is currently not a great experience.”
JB Hi Fi also deals with major electronic devices, an offering which Goodale says may keep consumers coming back into the store if customer experience improves.
“People still want to see and touch major electronics goods… I don’t think we're going to see a massive shift to buying electronics online as people like to talk about it, poke at things, generally browse and discuss; however, there will be a degree of loss of sales for more day to day items that are less emotional purchases so it’s going to have some sort of effect which they will need to replace.”
The performance strategy that is being updated will relate directly to New Zealand store, a changing market which Goodale hopes they will take advantage of.
“I’d like to think they might refresh their marketing strategy, which has never wavered but if I was them I would be really challenging. It’s harder for them to change the product strategy as they are reliant on what the world of technology brings us – but they can affect people’s view of them as the place to buy it.”
The next financial year is scheduled to end June 30 2018, to which Goodale claims the company would need several improvements of their strategy to raise dropped share prices.
“[JB HI-FI] Needs to be sure they understand what customers want from them and communicate their offering as clearly as possible…Carry on evolving ranging to reflect the market – and maintaining stock levels and ensure staff remain accessible and friendly.”
The New Zealand arm has 16 stores, making it a small part for the wider group's network of 302 stores. Net profit for the group rose 13 per cent to A$172.4m on a 42 per cent increase in sales to A$5.63 billion, ahead of its forecast of $5.58b.