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JB HI-FI Limited – Impact Of COVID-19 And Withdrawal Of FY20 Guidance

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

JB HI-FI Limited (ASX: JBH) is one of Australia’s largest retailers that sells and specialises in consumer goods. JB offers an extensive range of products including technology products, home entertainment and home appliances. JB has a market capitalisation of A$2.7 billion.

 

JB HiFi


Update on Coronavirus

The coronavirus (COVID-19) was first reported from the Wuhan province in China on 31 December 2019. The World Health Organisation data shows a total of confirmed cases of 462,684 and 20,834 deaths globally. As of today (26 March 2020), there have been over 2,985 confirmed cases and 8 have died of COVID-19 in Australia.


Update on share price

In the last month, JB’s share price has fallen by 37.25% and is currently trading at A$23.97. The downward trend is due to the spread of COVID-19 and its impact on the retail industry.


What is JB’s response to COVID-19

Due to the spread of COVID-19, it is apparent that the demand for retail services is weakening. In response to the pandemic, JB has implemented a range of measures to protect the health and safety of all patrons, business partners, team members and the wider community who visit the premises. Measure include intensive cleaning of all stores and offices, store traffic management processes, social distancing practices, encouraging cashless transactions, restricting travel and adopting flexible working arrangements. However, JB has advised it will continue to evolve measures and practices to take account of guidance provided by the relevant officials to maintain the health and wellbeing of the wider community.


What is the outlook for JB?

Given the uncertainty of the situation, JB has announced the withdrawal of its FY20 sales and earnings guidance. However, sales between 1 January 2020 to 22 March 2020 showed signs of growth. Total sales growth for JB Australia was 9.1% with comparable sales growth of 8.8% and total sales growth for JB New Zealand was -2.0% with comparable sales growth of -2.0%. Additionally, total sales growth for The Good Guys was 10.4% with comparable sales growth of 10.4%. Needlessly to say, JB continues to see strong momentum within the Australian market through the quarter. In the past month, both JB and The Good Guys have seen an acceleration of sales as patrons are purchasing essential predicts that they need to respond for COVID-19. More specifically, patrons are purchasing an influx of technology products that enable remote working, learning and communication devices, and essential home appliances for food storage and preparation.


Despite JB’s share price falling 37.25% in the past month, the retail giant is still able to perform domestically in the past quarter. Further, JB’s balance sheet remains strong which provides the company with significant headroom in its facilities and convents during this period.


Disclaimer:


This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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