Estimated full-year net profit after tax for JB Hi-Fi has just taken a hammering.
Annual profit forecasting for the consumer electronics giant was slated between $235 million and $240 million, but rounded out at $230 million in a statement made yesterday.
The company has its 2016 acquisition of The Good Guys chain to blame. While guidance presented on Wednesday for total sales remained unchanged at $6.85 billion, its Good Guys home appliance chain would drag earnings lower.
“The Good Guys performance has been impacted by challenging conditions in the home appliance market, due to unfavourable weather conditions coupled with heightened price competition,” the company said at a Macquarie conference in Sydney on Wednesday.
“This has had an adverse impact on gross margin in 2HY18 as we continue to focus on sales and market share”.
Sales at The Good Guys 104 stores in Q3 fell 2.9% on a same-store basis, compared to 1.2% growth in the same period the year prior.
The announcement sent JB Hi-Fi investors into punishing mode
According to SMH, shares dove as much as 10% in early trade to their lowest point in six months and closed at $23.28, a fall of 8.96% for the day.
JB Hi-Fi said that while “the challenging conditions in the home appliance market” has affected its performance, its 207 JB Hi-Fi branded stores will see it “perform strongly and in line with expectations”.
JB Hi-Fi’s same-store sales are up 4% in the last quarter, but down from 8.2% growth seen in the prior corresponding period.
The company said its focus is now on increasing average selling prices, improving store layouts, better delivery options and lifting its visual merchandising.
According to SMH, this means less drones and home security and more PC gaming, connected technology and home automation, and communications.