JBH - JB Hi-Fi

[Chasero]

Retail = down

Gold stocks = down

Oil = mediocre

Graphite = running.

That's my consensus after reviewing my April watchlist.

All my graphite stocks have run and run hard.

I've sold all my retail stocks long ago.

 

[McLovin]

I agree that PE compression was needed, however of those businesses with P/E listed in the post that you quoted do you think any of the others are close to having a 'competitive advantage'?

Yes, DJS. I'm sure it's not the consensus though. I'm skeptical JBH has much of a real competitive advantage.

I'm sure I've posted this here or in one the FA threads but it's an interesting perspective on JBH and HVN.

http://brontecapital.blogspot.com.au/2011/12/forthcoming-irrelevance-of-australian.html

 

[So_Cynical]

It is scary that the CEO said in the recent trading update...

"We anticipate that this level of discounting will continue over the next quarter but we do not believe that this is a long term structural change"

Yep i noticed that to, stuck out like dogs balls hey...my immediate thought was that this guy really doesn't know what's going on, he's stuck in the old model, its been good to him and its all he knows.

I always find it disconcerting how so many smart and successful people don't seem to know when it's over or it's time to go.

 

[McLovin]

Here's is a quick anecdote on competitive advantage.

There are 4 items on the JBH online shop, front page. I am going to search for same items online elsewhere and see what competitive advantage JB has.

1. Soniq 46" HD LED LCD TV (E46Z11A), $698.
Selling for $699 at Penta.com.au.

2. Teac 26" LCD Combo TV (1366x768), $299.
Selling for $309+$18 delivery at Billy Guyatts.

3. HP Pavillion 15" Notebook (G6-1310AX), $598.
Same price at officeworks.

4. Nikon J1 10-30VR (white), $646.
~$520 on ebay. $314 at Becextech. (Crazy price actually).

Competitive advantage = zilch.

That sort of pricing would lead one to believe they do have a competitive advantage. I think it's more of a "convenience advantage".

 

[skc]

That sort of pricing would lead one to believe they do have a competitive advantage. I think it's more of a "convenience advantage".

Are you saying they can (or think they can) charge same/higher because of their advantage in brand/convenience/trust? I guess we can't really tell because we don't know how their sales are for those items.

But the traditional advantage of JB is clearly price leadership... and I think the evidence is that it isn't that much of an advantage on the online arena.

 

[McLovin]

Are you saying they can (or think they can) charge same/higher because of their advantage in brand/convenience/trust? I guess we can't really tell because we don't know how their sales are for those items.

No, I'm saying their ability to charge a premium would be evidence (but not conclusive) of a competitive advantage (ie it's something you'd look for as proof it exists not to disprove it), that perhaps they have built their brand to the point where people go there assuming it will be the cheapest. Clearly they are not, which is why I think it's a convenience advantage ie if you're too lazy you shop there. That will slowly be eaten away at. Hempton makes the point in his blog about how they spend a fortune trying to look cheap. It's really hard to be the price leader (and earn economic rent) when your competitors are probably buying the same products off the same supplier for the same price.

JBH is in the same buying group as all these companies...

2nds World • Betta Electrical • Bi-Rite Electrical • Bing Lee • Bing Lee Sony Centre • Carlson Marketing Group
Clive Anthonys• David Jones • Downtown Duty Free • JB Hi-Fi • Nuance Group
Radio Rentals• Ted’s Camera Stores • Whitfords of Five Dock • Winning Appliances

But the traditional advantage of JB is clearly price leadership... and I think the evidence is that it isn't that much of an advantage on the online arena.

Yes, for that reason, I think they're screwed.

 

[mrlister]

Seems as though you had to shop around a bit for competitive prices, however jb has all under one roof. Plus, people still want to buy a large purchase ie TV from an actual shop. Warranty issues are too hard otherwise. I stopped going to jb as all the peripherals were too expensive. Which turned me off considering them for any other sales. There still is a place for them, but may not be in expensive real estate!!

 

[odds-on]

If you must buy this stock, buy it with money you have and take a loss on the next profit downgrade.

Further profit downgrades?! The ASX prom queen really has started dating some dropkicks.

 

[odds-on]

Yes, DJS. I'm sure it's not the consensus though. I'm skeptical JBH has much of a real competitive advantage.[/url]

Interesting. DJS is another retail stock not getting much love from the investment community these days. I suspect all this uncertainty about the future of retail is driving prices down to a point where the downside risk over the medium term is minimal.

 

[McCoy Pauley]

Yep i noticed that to, stuck out like dogs balls hey...my immediate thought was that this guy really doesn't know what's going on, he's stuck in the old model, its been good to him and its all he knows.

I always find it disconcerting how so many smart and successful people don't seem to know when it's over or it's time to go.

The original CEO of JBH got out at the right time, and now the current CEO is left holding the pieces as JBH's share price crumbles.

 

[confused01]

We have been analysing the annual report for jb hi fi for 2011, unfortunately we cannot find any reference to preference shares or Return on shareholder’s equity - we need to ascertain what the preference dividend figure is. Can some one point us in the right direction, even a page number or link would help thanks

 

[McLovin]

What preference shares?

RoE is NPAT/Shareholders equity. You have to work it out yourself from the figures in the P&L and BS.

 

[Bibimbap]

What r people's views of its upcoming results? Dividend maintained?
Retail seems to be picking up. DJS shares also stronger?

 

[skc]

What r people's views of its upcoming results? Dividend maintained?
Retail seems to be picking up. DJS shares also stronger?

Refer to HVN's recent trading update. Can't imagine JBH being too different.

 

[Tannin]

Refer to HVN's recent trading update. Can't imagine JBH being too different.

These two are VERY different.

HVN is going backwards (a) because there is no money in retail electronics anymore, (b) because their main store of value (retail real estate holdings) is not looking so smart now that the glory days of retailing are over and retail rents are under strong downwards pressure, (c) because Australians are smarter about money than they used to be and are more likely to save than make unplanned purchases using very expensive credit, (d) because the Harvey Norman brand is no longer well-regarded and generally approved of by shoppers who often feel that they have been pressurised and sold to once too often, and (e) because the company leadership is absolutely clueless about the Internet sales revolution. HVN has stong asset backing, and will probably survive and even keep paying dividends in the short to medium term, but if it is to succeed over time then Gerry Harvey needs to reinvent the company and I don't think he's up to the task.

JBH is going backwards because it specialises in electronics retail which is the worst possible thing to be selling these days - market saturation, prices keep on dropping and eroding margins, and electronics is the natural Internet sales leader. That's a huge burden for a retailer to operate under. Where most other big retailers are busy closing unprofitable stores, or even closing down completely in the case of DSE, JBH are still buying in! Yes, they are still opening new stores! That shows astonishing bravery. Or stupidity - I'm not sure which. Look at it this way - JBH might know something we don't, but I prefer to make my big, blind bets on things I can watch going around the track at Flemington or Randwick. It's more fun, and easier to pick the winner.

Still, they are alike in one respect: in their very different ways, they are both going backwards.

 

[fanger]

Does anyone have a technical view on JBH? I bought in at 8.90 then sold out around 9.80 and took profit hoping for a pull back to get in again but its just keep going higher.

 

[Out Too Soon]

Technical--JBH is in an uptrend trying to go sideways, not terribly exciting but worth watching.

Fundamental-- A few months ago I suddenly found myself needing WIFI dongles after a Telstra sales kid misled me
I ducked into Harvey N & a rude disinterested salesman eventually showed me one for $99 I said, ïs that the cheapest?" He then grumpily showed me the other one in stock for $33 I then went to JB-HIFI where a friendly, helpful girl showed me their only dongle for $66

I then went home & bought 3 perferctly good dongles for $5 ea off Ebay & waited a week for them to arrive.

Lesson, wondering how on earth Electronic stores can survive without drastically changing their business model.

 

[stevier95]

Curious as to everyone's thoughts about JB HIFI. Down to $10 from its highs of $16 this year, although slightly above it's yearly lows of around $8. Is there any room for retail at the moment given Christmas is fast approaching, or could this prove to be a bit of a disappointment?

 

[Smurf1976]

If the fridge or washing machine dies then for most people that is approaching an emergency situation. If they have kids then it is an actual emergency. They will go to HVN etc and pay the asking price to get a new one delivered as soon as possible.

With the possible exception of mobile phones, which is a highly competitive market, JBH doesn't really sell anything that is commonly purchased under emergency conditions. Instead, consumers have plenty of time to shop around and, in most cases, purchase online instead.

I can't see the actual demise of the likes of DJS happening anytime soon. They will simply direct their efforts and floor space toward goods that sell better in a physical store environment and get out of things that aren't profitable. But JBH is primarily in the business of selling things which are well suited to selling online and which are of a commodity nature so they don't have that option.

You might compare an item of clothing at Myer, DJS and a couple of other stores as well and make a choice based on fit and appearance rather than price. But Windows 8 is Windows 8 and an iPhone 5 is an iPhone 5. You're just going to go for the cheapest price knowing that it's an identical product. There's no actual reason, other than the "have it right now" factor, why you'd pay more than the cheapest available price.

Overall, I just can't see that there's any good news for this type of retailer. Unless they are cheap, there's no real reason why anyone would even walk into the store in the first place.....

 

[notting]

Unless they are cheap, there's no real reason why anyone would even walk into the store in the first place.....

Perhaps they could change their name to 'Try Before You Buy'. Sell coffee and snacks.
I went in on Sunday to try win 8. Wish Android would do a PC OS. It's better than Apple and windows.
I'm looking for total integration on one platform - phone, PC, tablet, TV. None of em r quite there yet.
Perhaps that could be part of the service - I-Integrate,