What Is JB HI-FI Growth?
In FY2016, JB HI-FI has an impressive sales growth of from 4.8% to 8.28% since the high-demand of consumer electronics goods; the collapse of Dick Smith and the acquisition of home appliances chain The Good Guys. Therefore, it is reasonable to expect that company will continuously deliver growth rate over the next period, specifically is the estimation of 5.98% from FY17 through FY22. The in-depth consideration of general economic conditions and business condition will be further determining JB HI-FI growth prospect.
Firstly, inflation will be one of reason shift the company price, however, it is expected that inflation rate will not highly rise in future as the recovering and attaining stability of retail industry. Therefore, the inflation
in next five years is expected around 1.5-3% on sale price. Secondly, the annual wage growth that has declined around the pace of inflation about 2-3% means that Australian consumer won’t have much income to spend. Furthermore, the forecast of weaken in AUD over the coming could potentially decrease JB HI-FI profit as import sources primarily from multinational such as Asia where trade with foreign currency. Therefore, it places a barrier for JB HI-FI to extremely success in future while serving consumer with quality products at discounts prices.
JB HI-FI is operated in a ‘shift to value’ in consumer behaviour industry as the rapidly innovative in products, then lead to the uncertain in consumer discretionary spending and consumer demand. Significantly, the expansion of Amazon in FY19 are likely cutting JB HI-FI target price by 35% to $18.5 as decreased in retail deflation because price of Amazon is 15% cheaper than Australian electronic retailer. Furthermore, consumer demand saturation and intra industry competitor are also enormous threat. There would be limited integration undertaken in future as the shift in The Good Guys’ corporate structure with more than 30 joint venture storeowners leaving the group.
Generally, although JB HI-FI was strongly performing within industry in FY16 which is higher than industry benchmark that is only 3.1% (Trading Economics 2017), their sales are assumed to maintain at moderately 5.98% from FY17-FY20, based on historical data which shown in Graph 1, due to the sustainability growth and competitive risks emerging for the electronics industry.
Firstly, inflation will be one of reason shift the company price, however, it is expected that inflation rate will not highly rise in future as the recovering and attaining stability of retail industry. Therefore, the inflation
in next five years is expected around 1.5-3% on sale price. Secondly, the annual wage growth that has declined around the pace of inflation about 2-3% means that Australian consumer won’t have much income to spend. Furthermore, the forecast of weaken in AUD over the coming could potentially decrease JB HI-FI profit as import sources primarily from multinational such as Asia where trade with foreign currency. Therefore, it places a barrier for JB HI-FI to extremely success in future while serving consumer with quality products at discounts prices.
JB HI-FI is operated in a ‘shift to value’ in consumer behaviour industry as the rapidly innovative in products, then lead to the uncertain in consumer discretionary spending and consumer demand. Significantly, the expansion of Amazon in FY19 are likely cutting JB HI-FI target price by 35% to $18.5 as decreased in retail deflation because price of Amazon is 15% cheaper than Australian electronic retailer. Furthermore, consumer demand saturation and intra industry competitor are also enormous threat. There would be limited integration undertaken in future as the shift in The Good Guys’ corporate structure with more than 30 joint venture storeowners leaving the group.
Generally, although JB HI-FI was strongly performing within industry in FY16 which is higher than industry benchmark that is only 3.1% (Trading Economics 2017), their sales are assumed to maintain at moderately 5.98% from FY17-FY20, based on historical data which shown in Graph 1, due to the sustainability growth and competitive risks emerging for the electronics industry.