JB Hi-Fi Group downgrades guidance

good guys savillsJB Hi-Fi Group has downgraded its FY18 profit guidance after heightened price competition in the home appliance market constrained The Good Guys’ (TGG) third quarter sales.

The company now expects total group net profit after tax (NPAT) to be around $230 million for the full year, down from its previous $235 – $240 million range.

JB Hi-Fi shares fell to a five month low on Wednesday, down 8.53 per cent to $23.29.

TGG booked a 1.3 per cent decline in total sales in the third quarter, while comparable sales were down 2.9 per cent.

The appliance and white goods retailer’s margins have suffered over the last three months as the businesses has invested in price to protect market share and drive sales, JB said on Wednesday.

“The Good Guys performance has been impacted by challenging conditions in the home appliances market, due to unfavourable weather conditions coupled with heightened price competition,” the company said.

“This has had an adverse impact on gross margin in 2HFY18 as we continue to focus on sales and market share.”

JB said sales TGG’s sales growth has improved over the quarter as the sales it was cycling from the pcp moderated.

Meanwhile, JB Hi-Fi was unable to keep pace with its double-digit Q3FY17 performance, recording third quarter sales growth of 6.8 per cent, compared to 10.8 per cent in the prior corresponding period (pcp). Comparable sales growth was 4 per cent, down on the 8.2 per cent booked in the pcp.

JB said both its businesses were impacted by the timing of Easter, with one less trading day in Q3FY18.

Over the last twelve months JB has progressed its integration of TGG, which it bought for $870 million in 2016, finalising a new executive team under Terry Smart, completing a support office restructure and developing a sales performance program.

It will now turn its focus to improving in-store experience across TGG’s network as well as increasing supplier engagement and improving product delivery options.

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