Yahoo Finance JB Hi-Fi posts record earnings as Aussies spend big online
How many TVs can we possibly need, Australia? The answer, it seems, is always: More. And bigger. You can buy a 98-inch TV these days, if you’ve got a room big enough to put it in.
We just can’t stop spending money on electronics and, as a result, we have blown up the size of JB Hi-Fi yet again.
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The former hi-fi retailer - which became a record store in the 1990s and then an electronics retailer after CDs stopped being a thing - is growing to a stupendous size, as the next chart shows.
JB Hi-Fi sold more stuff in 2020 as people started needing things to work from home. It sold yet more in 2021 as people found themselves rich in government payments and wanting to treat themselves.
You might have thought it was time for a rest in 2022. Take a pause, enjoy all the gadgets we’ve bought over the past two years. Nope. Australians don’t want to take a rest. We want more TVs.
So, on top of huge growth, JB Hi-Fi has piled on more. It announced on Monday that, in the most recent financial year, its Australian business sold $240 million more than the year prior, despite stores being closed for COVID reasons in parts of 2021, and fears of recession haunting the start of 2022.
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What do they sell these days? Mostly hardware. Sales of music, movies and games fell 11.9 per cent.
But the big yellow retailer shrugged that off. TVs, phones, laptops, earbuds, smartwatches - these things easily filled the gap.
You might be wondering if the higher level of sales is just about inflation - it’s a very important thing to be aware of these days.
But if we look at the inflation statistics, the price of “communication equipment” increased by just 2.4 per cent in the past year – a lot less than most items. That means if JB is making 4 per cent more money selling phones, it is by selling more of them - not just the same number at higher prices.
JB is certainly not the biggest retailer in the country. Woolworths sells more stuff every three months than JB sells in a year. Coles too. Bunnings and Kmart also do more business.
But for a store that sells USB cables and iPads – things you don’t need to buy that often, if at all - it does incredibly well.
Dance the dance
JB is one of those very clever retailers that creates a discount-store vibe – with those fun, hand-drawn signs, price-match guarantees, and the ability to haggle – while being a corporate behemoth with rising profit margins.
It’s a business model we swallow, hook, line and sinker.
One thing you can’t fault JB for is flexibility. They’re not just selling hi-fi speakers any more, they’ve given up on CDs, and software and computer game sales are plummeting.
They have also done a reasonable job at fixing their website. Despite being slow at online sales at first, they’ve gone online with a vengeance during the pandemic.
These days, many people are happy to buy a mobile phone online. We are confident in what one is and does. There’s no longer the need to go into the shop and touch it before spending the money.
JB sells a lot of phones and it has very strong online sales, as the next chart shows. Since pre-pandemic, online sales have quadrupled to a kind of staggering $1.6 billion.
But don’t imagine it will ditch those yellow shop fronts with their hand-drawn signs.
The company is very careful to point out, “the importance of physical stores in the higher-involvement, product-shopping journeys”.
That’s corporate-speak. What they mean is when you’re buying something you’re not familiar with, or spending a lot of money, you want to see it before you buy it.
So, there will continue to be a role for the JB salesperson when you’re thinking about buying a new computer or, of course, a particularly big TV.
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