JB Hi-Fi boss Nick Wells warns trading ‘has got a little bit harder’ as cash-strapped shoppers pull back

JB Hi-Fi boss Nick Wells says he has seen a sharp downturn in trading in July as the combined impact of higher interest rates, a poorly received Federal Budget and a cooling housing market kept shoppers away.

Stock shortages and supplier price hikes also kept consumers at bay.

The retail bellwether — which also owns JB Hi-Fi New Zealand, The Good Guys chain and home appliance and bathroom retailer e&s — delivered record sales of $11.06 billion in the 12 months to the end of June. Net profit grew 6 per cent to $489.9 million.

Both results were slightly below analyst expectations, triggering an 11.6 per cent decline in the company’s share price to $72.26 just before 11am on Monday.

In a trading update accompanying the full-year results, JB Hi-Fi revealed sales growth went backwards across the majority of the group in July.

Over the month, same-store sales growth for the flagship Australian JB Hi-Fi stores fell 1.4 per cent and for The Good Guys they slumped 1.7 per cent.

At e&s, comparable sales declined 4 per cent, while JB Hi-Fi NZ posted near-12 per cent growth.

Asked what contributed to the negative sales growth, Mr Wells said it was “a bit of a combination of everything”.

“From a macro perspective, it has got a little bit harder,” Mr Wells told analysts on a call.

“(July) is one month and it is a small month, and I would say it’s not a promotional period,” Mr Wells said.

“What we can see is that those promotional periods have become increasingly when customers are looking for value, and so periods like end-of-financial year in June and Black Friday become really important, and then maybe it sucks a little bit out of those non-promotional periods like July.”

Mr Wells said it was also cycling the Nintendo Switch 2 release the prior year.

He warned suppliers continued to push prices higher and stock availability shortages in the technology categories remain a key issue.

Mr Wells confirmed categories like laptops and PCs have been significantly affected by component shortages, with some brands hiking prices by as much as 50 per cent.

Earlier this year, Mr Wells warned consumers could expect to pay more for their gadgets as the artificial intelligence-led boom in data centres squeezes technology supply chains. The rush has triggered stock shortages of computer memory and pushed prices up.

eToro APAC lead analyst Josh Gilbert said investors have stopped looking at the year that just finished up and were pricing the four weeks of July instead.

“JB is the bellwether for Australian discretionary retail, so today’s weakness is likely to weigh on sentiment across the sector, whether others deserve it or not,” he said.

And while it may appear as a consumer problem, Mr Gilbert said it didn’t paint a full picture.

“Management has been flagging supplier price rises and stock availability issues in technology categories, and the business bought inventory earlier than usual ahead of the key June promotional period to secure stock,” he said.

“That suggests at least part of the slowdown is about getting enough product onto shelves, rather than simply consumers refusing to spend.”