JB Hi-Fi is proving itself to be the pin-up of the “softening Australia” sell-off. It’s a lesson all blue chips should heed.
JB Hi-Fi shares are tanking harder than Sydney property prices, yet for some reason no one’s talking about it.
Hedge funds are shorting it, index funds are offloading stock, and active managers, who freely call this one of the best managed companies on the ASX, are not brave enough to step up and stop the rot.
Why? It’s a toxic combination of falling house prices, expectations of more interest rate rises, weak consumer spending, tech price inflation, and stock shortages, which threatens to stop the golden goose of Australian retail.
One of the most shocking bits of news from reporting season – and it really was overlooked – was JB Hi-Fi’s slow start to FY27. Comparable sales in its Australian JB Hi-Fi and The Good Guys stores were down 1.4 per cent and 4 per cent, respectively, which were very un-JB Hi-Fi numbers. The same time last year it was talking about 5.1 and 3.8 per cent growth, while the year before it was a positive 5.2 and 2.7 per cent.
Yes, it’s just one month and July’s a bit of a non-event in Australian retail, but it has got investors questioning its earnings durability should all the moving pieces, including more rate rises, turn into an economic downturn.
It’s testing the story we’ve been hearing for years that selling iPhones and laptops is like selling bananas and JB Hi-Fi should trade at supermarket prices.
JB Hi-Fi chief executive Nick Wells has met dozens of investors since, no doubt telling them July is just one month, and yet the share price has kept falling. It recorded a fresh 12-month low on Wednesday to be down 43 per cent in the past year, proving itself as the pin-up of the “softening Australia” sell-off. (The two biggest mortgage banks, Commonwealth Bank and Westpac, are down 6.5 per cent and 8.7 per cent respectively.) Other big retailers were asked their views on JB Hi-Fi’s trading during their roadshows.
Source: https://www.afr.com/chanticleer/why-investors-are-letting-jb-hi-fi-s-golden-goose-burn-20260909-p60vob