The premium appliance market is set to get a shake up after JB Hi-Fi snapped up Melbourne based retailer E&S Trading a move that will see the big CE and appliance retailer go up against Harvey Norman Commercial, Winnings and Bing Lee’s Signature stores that sell premium appliances to the building industry.
Channel News understands that JB Hi-Fi management was initially knocked back when they first approached the specialist retailer.
Announcing their latest results JB Hi Fi said that recently into an agreement to acquire E. & S. Trading Co. (Discounts) Pty. Ltd, with an initial acquisition of 75% for cash consideration of $47.8 million.
The acquisition will allow JB Hi Fi to expand the operation into other States according to insiders.
JB Hi-Fi Group CEO, Terry Smart said, “E&S is a high-quality business that prides itself on offering the world’s leading kitchen, laundry and bathroom brands at great prices with expert advice and exceptional customer service.
“e&s has a highly complementary premium product offering, which will appeal to a new customer base and a commercial construction market focus, making it a strategically compelling addition to the group.”
e&s managing director, Rob Sinclair said JB Hi-Fi’s investment in e&s demonstrates its confidence in the business model and the opportunity for strong future growth at the premium end of the sector.
“This partnership will allow us to expand our reach and continue delivering exceptional service and top-notch products to our valued customers,” he said.
e&s will retain both its brand and unique operating model and operations at all current stores will remain unchanged.
“It will be business as usual at all existing stores. Our customers can expect the same excellence they have come to know and trust. JB Hi-Fi’s deep understanding of the homemaker sector and extensive experience in the appliance industry make it an ideal partner for our business,” Sinclair added.
“e&s’ established reputation as an industry leader in the high-end appliance market will complement JB Hi-Fi Group’s existing businesses and bring a new premium offering to the JB Hi-Fi Group.”
The retailer, which also owns The Good Guys announced a fully franked dividend of $1.03, down 12¢, from a year ago in line with lower profits.
Overall, JB Hi-Fi group sales fell 0.4 per cent to $9.59 billion in the 12 months to June 30, this was higher than what analysts expected.
Earnings before interest and tax fell to $647.2 million, but that also beat the expected fall of 18.5 per cent to $626.6 million by the market.
Net profit fell 16.4 per cent to $438.8 million.
Total sales increased by 1.0% to $6.61 billion, with comparable sales up 0.6%, driven by continued customer demand for technology and consumer electronics products
Also contributing was what JB Hi Fi management described as “well-executed Black Friday, Boxing Day and Tax Time promotions” that drove consumers online and into stores.The key growth categories were Mobile Phones, Small Appliances, Cameras, Games Hardware and Services. Online sales increased by 2.8% to $1.03 billion or 15.5% of total sales. Gross profit decreased by 0.9% to $1.47 billion with gross margin down 42 bps to 22.2%, driven by sales mix and increased levels of on-floor discounting.
CODB was 12.6%, up 54 bps, and in absolute terms grew 5.5%, with disciplined cost control helping to manage inflationary cost pressures. The business’s low CODB remains JB Hi-Fi Limited a competitive advantage and is maintained through a continued focus on productivity, minimising unnecessary expenditure and leveraging scale.
More to follow.
