Business Report: Performance, Expansion Plans and Threats to JB-Hi-Fi

This report presents an analysis of JB-Hi-Fi's current market performance, highlighting its leading position in the Australian consumer goods retail sector. It examines the company's financial achievements, expansion plans, and the competitive threats it faces, particularly from Amazon's entry into th...Read More

Running head: BUSINESS MANAGEMENT
Business Management
March 20
2019

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Table of Contents
Introduction................................................................................................................................2
Performance of JB-HI-FI.......................................................................................................2
Outlook for Expansion...........................................................................................................2
Fear for JB-Hi-Fi....................................................................................................................3
Managing Threats...................................................................................................................4
Conclusion..................................................................................................................................4
References..................................................................................................................................6

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Introduction
The aim of this paper is to present the report to the board of JB-HI-Fi Company, regarding its
present performance in the market. The paper is majorly highlighting what the company is
doing and has achieved.
Performance of JB-HI-FI
JB-Hi-Fi is successfully maintaining its leading position in the Australian market as the
consumer goods retailer, specializing in Ultra HD Blu-rays, electrical home appliances,
mobiles phones, video games, Blu-rays, DVDs, CDs, mobiles phones, electronics/hardware,
and a number of Telstra services (IBIS World, 2018).
In 2017, JB-Hi-Fi aimed to increase its earnings and sales to more than 20% in the year 2018
in spite of treading up investment on technology, e-commerce, and staff to “future proof” its
operations ahead of expansion plan of Amazon. On the other side, Richard Murray the chief
executive of JB-Hi-Fi expected the sales of the group to increase around 21% to over $6.8
billion in the yearn 2018, reinforced by 6% growth of sales at JB-Hi-Fi stores (Mitchell,
2017).
With the analysis of the 2018 financial results, it could be observed that the full year profit of
the company has jumped 35% to around $233.2 million, compelled by home appliance and
consumer electronics sales. The total sales of the electronics retailer raised 21.8% to around
$6.9 billion. It is a little better than the anticipated outcomes, beating the $230 million profit
direction reflected by the company in May (Chau, 2018).

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Outlook for Expansion
JB-Hi-Fi is anticipating its sales in the present financial year of around $7.1 billion with
$4.75b in the Australian market, $220m in the New Zealand market, and $2.15b The Good
Guys (Chau, 2018).
It has planned to open around 2 more The Good Guys stores and 5 more JB-Hi-Fi stores in
Australia. In addition to this, it is planning to close one of its JB Hi-Fi stores in the market of
New Zealand.
The shareholders of JB-Hi-Fi will receive a total dividend of 46 cents per share that is 9 cents
more in comparison to last year dividends.
The shares of JB Hi-Fi that are considered as most shorted in the Australia Stick Exchange
list, rose 1.75% to around $23.88 (Chau, 2018).
Fear for JB-Hi-Fi
JB-Hi-Fi is experiencing a major shake in the retail sector due to Amazon, the giant online
retailer who is planning to set its place in the Australian market. Amazon is listed in the
biggest "disruptor" for the retailers. It is expected that the online giant can generate sales of
around $4 billion in the retail market of Australia with a major concentration on electrical
items, which will be a direct threat to the profit of Harvey Norman and JB Hi-Fi business
(Cummins, 2016).
According to the estimations of Brokers, the most obstructed retailer, whose profits can
decrease to around 23% is JB-Hi-Fi, followed by a decline in the earnings to 19% of Harvey
Norman (Cummins, 2016).
The sales of the JB Hi-Fi can fall to 6% if Amazon completely got involved in the Australian
market. There will be around 2% effect on the sales of Premier Investment and Myers

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because they operate in selling their own merchandise and Australian-centric brands
(Cummins, 2016).
Managing Threats
The increasing sales of JB-Hi-Fi reflect that it is effectively leveraging its economies of scale
in order to reduce the level of its prices by also increasing the profit margins. As the
fulfillment of online order has improved the sales volume, the company has also focused on
managing its operating costs (Pash, 2018). This is offering a competitive advantage to the
company. JB-Hi-Fi is continuously investing the high amount in its online platform by
enhancing and expanding the options of delivery to fight the possible threat of Amazon in the
Australia market.
Customers in Australia has today become highly value conscious, with online operators like
Kogan.com and Amazon providing low price products for a high range of products. Whereas,
JB Hi-Fi has improved its online sales in the market of Australia by 32.1% in the year, in
order to showcase the total sales of around 4.6% (Pash, 2018).
Amazon in the Australian market has reflects a loss after tax of around $8.9 million, and
revenue of around $17.4 million in the year (Pash, 2018). Though, it must be noted that the
company initiated its operations in December month and earned revenue only in that month.
This reflects that businesses like Amazon majorly concentrate on increasing their market
share at the cost of profit.
Conclusion
The paper has highlighted in brief the present performance of JB-Hi-Fi Company and what
aspects are affecting its performance. From the analysis, it has been identified that the
company has an effective performance in the retail market but, is being threatened by the

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expansion plan of Amazon. However, the company is strongly facing the competition and
enhancing its online operations, which are being reflected through its increasing online sales.

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References
Chau, D. (2018). JB Hi-Fi profit jumps 35 per cent amid tougher retail market. Retrieved
from https://www.abc.net.au/news/2018-08-13/jb-hi-fi-profit-jumps/10113374
Cummins, C. (2016). Amazon Australia expansion set to shake up JB Hi-Fi and Harvey
Norman. Retrieved from https://www.smh.com.au/business/companies/disruptor-
amazon-set-to-shake-up-jb-hifi-and-harvey-norman-20160926-groe32.html
IBIS World. (2018). JB Hi-Fi Limited - Premium Company Report Australia. Retrieved from
https://www.ibisworld.com.au/australian-company-research-reports/retail-trade/jb-hi-
fi-limited-company.html
Mitchell, S. (2017). JB Hi-Fi underlying profit up 36.5pc to $207.7m. Retrieved from
https://www.afr.com/business/retail/jb-hifi-underlying-profit-up-365-pct-to-2077-m-
20170809-gxsjxx
Pash, C. (2018). How JB Hi-Fi is keeping Amazon at bay. Retrieved from
https://www.businessinsider.com.au/jb-hi-fi-amazon-retailing-2018-8