As investors bail on retail stocks, the CEO of JB Hi Fi claims that “business has picked up” and that demand for computers which includes tablets, DVDs and smartphones is driving business running into Xmas.
Late yesterday JB Hi Fi stock had fallen to $11.80 after reaching a low of $11.78 earlier in the day. But by 12 noon today Tuesday the stock had climbed to $11.98.
According to CEO Terry Smart the consumer electronics company is doing well when compared to competitors like Harvey Norman, Dick Smith and several other retailers who are currently struggling to sell consumer electronic goods.
Smart who is witnessing strong Apple sales including iPads and Mac PCs said that JB Hi Fi was “gaining market share across several categories” as competitors falter.
Currently the CE and IT category is witnessing 8% growth according to GFK data.
Smart said content such as DVDs and games, areas where JB Hi Fi is strong, was helping sales. The upcoming launch of their Music Now service would also help as JB Hi Fi had the relationship with vendors to get the service onto a multitude of devices including PCs, Tablets TVs and sound devices, such as those manufactured by the Sonos, Yamaha and Pioneer.
According to Scott Browning Marketing Director at JB HI Fi, the new service will go live with the JB Hi Fi Music streaming service embedded onto several devices. This he said allows device owners to access six million songs for $7.00 a month.
“A tablet owner will next year be able to access the service on a PC or their sound system as well as their tablet without paying an additional fee” he said.
According to Smart the retailer has not been able to make up on the downturn witnessed in the first half of 2011. He also said that December 2011 was at this stage down on 2010 but despite this the company has been able to bring costs under control without compromising service.
“Great service and a great retail experience are essential and we are delivering that across all our stores. Consumers still want service and a good education experience when they come into buy, they need to feel confident and we are working hard on delivering that across all of our store network” he said.
Yesterday, Billabong International Ltd cut its sales and profit outlook and announced a review of its operations, inspiring a sell-off across the sector.
The SP 200 Retailing index slumped 34 per cent in 2011, Norman lost 38 per cent and department stores David Jones and Myer both dropped more than 40 per cent.
Myer Holdings Ltd shares closed 6.19 per cent weaker at $2.12, after hitting a low point of $2.06, against a benchmark index fall of 2.37 per cent. Rival David Jones lost 9.095 per cent to $2.50.
Harvey Norman slumped 8.69 per cent to $1.78.
Woolworth’s chief executive Grant O’Brien, who is also responsible for the Dick Smith and Big W store operations, said recently that retail conditions were the most difficult he had experienced in his 24 years at Woolworths.
Professor Tim Harcourt from the Australian School of Business at the University of NSW (UNSW) says the Australian economy is experiencing intergenerational change.
“Retailers are facing a perfect storm, because there is incredible competition in manufacturing and consumer goods,” Mr Harcourt told AAP.
Mr Harcourt predicts a complete change in Australian retail markets, due to online competition.
But he’s confident that businesses will be able to adapt and survive by providing competitive pricing and service.
“They’ll come up with their own strategies and respond,” Mr Harcourt said.
According to Smart JB Hi Fi is in an excellent position to weather the retail downturn.
“We have an excellent brand and a consumer that trusts us. We are starting to deliver click revenue streaming content services in areas where our customers have traditionally purchased packaged goods”.
Smart also said that the company is currently negotiating to deliver streaming movies and games in the future.
“We are at the forefront in consumer electronics this is a category that is still growing. We are getting growth from telco, accessories, computers, content such as DVDs and the devices that content is played on. I am comfortable as to where we are at.”