Investors are jumpy – selling down companies that miss guidance or, even worse, downgrade their forecasts.
At the same time they reward companies handsomely for merely suggesting they might meet guidance for the year.
And so it was with JB Hi-Fi (JBH) yesterday, the country’s premier consumer electronics retailer.
The company has been on the nose with investors for the best part of a year – indeed the shares peaked at $23.13 in November 2013 and hit their 52 week low earlier this month of $14.35 as the market has taken a set against most retailers in general.
JB Hi-Fi hasn’t helped by revealing a slowing in sales growth in late 2013-14, and a continuation of that slower pace (in fact same store sales growth turned negative) in the early weeks of the 2014-15 financial year.
But at yesterday’s AGM the company told shareholders it was on track to meet its 3.4% sales growth target for the full financial year to around $3.6 billion.
JB Hi-Fi’s new chief executive Richard Murray said same-store sales this year have fallen 2.1% from the year-earlier period but total sales so far this year had risen 0.5%.
That’s hardly convincing, but it is a big improvement on JB Hi-Fi’s performance in July, when the company said total sales were down 3.2% and same-store sales down a nasty 5.5%, as consumer confidence waned on top of weak sales of computer tablets.
That set the market cheering the shares which jumped by more than 11%, and closed up 9% at the close at $16.10.
JBH YTD – JB Hi-Fi shares jump on improving sales
"Week to week trading remains volatile, however it is pleasing to see a return to growth in sales in September and October, which we believe places us in a good position as we move into the key Christmas trading period," Mr Murray told the annual meeting in Melbourne yesterday.
“We maintain our guidance for 2015 total sales of circa $3.6 billion (vs $3.48 billion in 2014) and expect the market to remain competitive as retailers drive for market share," he said.
Helping steady sales has been new products such as the iPhone 6 and Microsoft Surface Pro 3 and new gaming consoles like the Xbox One and the PlayStation 4.
According to Mr Murray increased stock of both consoles have helped turn sales around.
JBH expects to open eight new stores this year (three in the first half) and will convert 26 existing stores to JB HI-FI HOME where it is taking on Harvey Norman in whitegoods and other homewares.
Mr Murray said capital expenditure is expected to be in the range of $50 million to $55 million, driven by new, relocated and converted stores.
