JB Hi-Fi boss Richard Murray has warned shoppers to expect stock shortages on televisions and other electronics for the foreseeable future as soaring sales off the back of elevated demand for consumer tech cripples global supply chains.
Mr Murray told The Age and The Sydney Morning Herald his whitegoods chain The Good Guys had especially struggled to get in new inventory of televisions from overseas suppliers thanks to COVID-related delays.
“Certainly for the last few months if there was one category that’s been a challenge it’s TVs,” he said. “We’ve had such continued demand globally and panel manufacturers are trying to get out as much volume as they can.”
The issues will be compounded by TV companies beginning to upgrade their models in March and April, which will require manufacturers to build up inventories of the new models before starting to ship them to retailers.
Mr Murray said there would be “pockets” of other consumer electronics where stock shortages could arise but none as widespread as televisions, though the chief executive said his retailer and its suppliers were working as hard as possible to secure fresh supply.
“This will be a constant challenge for us,” he said. “While we have elevated sales, the global supply chain for consumer electronics is working as hard as it can. Suppliers have done a remarkably good job, all things considered.”
An international backlog in manufacturing and shipping has caused delays across all manner of consumer goods in recent months. The shortages differ from those seen earlier in the pandemic, however, which were related largely to logistics issues stemming from China.
However, these concerns only put a mild dampener on JB Hi-Fi’s record half-yearly result released on Monday, with the company announcing its sales for the last six months of 2020 had risen 23.7 per cent to $4.9 billion.
Net profit at the prominent retailer almost doubled, rising 86.2 per cent to $317.7 million and JB Hi-Fi’s online sales rose 161.7 per cent to make up nearly 14 per cent of the business’ total sales at $678.8 million.
The retailer has been riding on the back of an electronics spending spree driven by heightened stimulus and COVID-19 lockdowns forcing more people to work from home. The boom has meant JB could nearly double its dividend to $1.80 per share, payable on March 12.
Sales across the half were primarily driven by a 25.8 per cent spike in trade of computers, gaming consoles, phones and small appliances. Movies sales fell, but spending on video games and music rose. The Good Guys reported a similar trend, with refrigerators, portable appliances, televisions and computers booming as customers ‘cocooned’ inside.
Mr Murray labelled the results as “extraordinary” and said the Australian economy appeared to be in remarkably good health, pointing to indicators such property prices and consumer confidence, and praised the country’s collective effort to “cushion the blow”.
He backed calls by Reserve Bank treasurer Philip Lowe to permanently increase the rate of JobSeeker, referring to it as an issue of fairness. “I’d be supportive of the current JobSeeker rate staying, but that’s out of respect for those people on JobSeeker rather than any impact on JB Hi-Fi,” he said. “When you look at those numbers, it just feels like the right thing to do.”
January sales at the business continued to grow in line with the prior six months, up 17.3 per cent at JB Hi-Fi Australia. However, sales grew a slightly more subdued 14.1 per cent at whitegoods seller The Good Guys which Mr Murray attributed to a difficulty in stocking TVs.
Citi analyst Bryan Raymond said January’s rate of sales growth was largely positive despite the weaker stock level, though pointed to weaker margins at JB Hi-Fi stores as a broader downside to the result.
Both Mr Raymond and Mr Murray were bullish about continued growth at the retailer, with the analyst predicting the retailer would not return to pre-COVID levels until next year “at the earliest”.
JB did not receive any wage subsidies through 2020 and continued to pay landlords rent. Shares rose 2.6 per cent to $52.23 in afternoon trade.
This story originally appeared in the Sydney Morning Herald. Read the original story here.
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