JB’s shares have taken a trouncing after its profit warning yesterday.
JB Hi-Fi shares are down as much as 15% on the Australian Stock Exchange today after it announced a dip in sales of 1.8% across Australia and NZ stores, late yesterday.
Shares are currently hovering at around the $13 mark, although the fall seems to have calmed somewhat this afternoon after early morning trading.
And in a surprise pre-Christmas move, It downgraded earnings for the first half 2012 by 5% from previous forecasts.
The earnings decline will result in earnings per share (EPS) being approximately 1% below 2010.
“Sales in the second quarter have improved, ” CEO Terry Smart said yesterday but not enough to counter the impact of the first quarter drop in sales, he added.
Tight margins “driven in large measure by a high level of discounting in the market, with some retailers pricing inventory below cost,” were also negating factors to growth at present, Smart said.
However, it wasn’t all bad news for the retailer, who reported online sales jumped 80% and TV, PC sales all going well.
However, the news was enough to irk investors.
The retailer’s share price has now fallen to its lowest point in over two years.
“We can’t control the share price,” Smart told SmartHouse today, but “we can only hope [the market] gets better in the New Year.”
“Christmas is a bit softer than last year and while we are down, it is an improvement on current trends.”
He also said the below cost selling some retailers were engaging in was unsustainable, but said, “we thive on discounting, the problem is consumer confidence.”
“If we see some improvement, then we’ll see good growth.”
However, despite the fall, Christmas trading has started to build “momentum” and was “well positioned to take advantage of the busy trading,” the retailer said in a statement yesterday.
However, JB Hi-Fi will be just the first in a long line of big names to downgrade profit, as retail continues to suffer the blues, analyst believe.
”If JB Hi-Fi is copping it, I’d hate to think how Dick Smith and Harvey Norman are tracking at the moment,” one analyst, told Fairfax Media.
”By doing it now, it shows they don’t expect a pick-up, which is pretty telling.”
