The retail sector gained a crucial insight into how the industry is performing as the impact of the Government’s stimulus package fades, with JB Hi-Fi reporting that its first quarter sales were in line with expectations.
Speaking at today’s annual general meeting in Melbourne, chief executive Richard Uechritz said the company’s comparable store sales for the three months to 30 September were up 8.4% and “in line with expectations”.
“While the economic outlook remains unclear, we are encouraged by recent signs the Australian economy and consumers are feeling more confident than this time last year,” he told the meeting.
“Coupled with JB’s focus on home entertainment and with the all important Christmas and New Year trading periods ahead of us, the company remains confident that it will meet market expectations. We maintain our previous sales guidance for 2009-10 of circa $2.8 billion or a 20% increase on last year.”
The solid sales growth will be warmly welcomed by retailers, who had been concerned that retail sales would soften as the effect of the Government’s huge cash splash began to fade in the second half of the year.
However, it appears that the rapidly recovering economy is convincing consumers to keep their wallets open.
The sales growth at JB Hi-Fi should cheer the company’s rivals Clive Peeters, which admitted yesterday that conditions remained extremely difficult.
Clive Peeters has had a horror year, following revelations that a staff member allegedly defrauded the company of more than $20 million. Managing director Greg Smith says uncertainty created by the incident had hurt sales in August and September and 2010 will be a year of recovery and consolidation given some uncertainty still exists in the market.
“Big ticket discretionary retail, which is where we sit, is still fairly challenged. The recent interest rate rise won’t help,” he told the Australian Financial Review.
“In my experience in this industry the fact that influences retail conditions in the big ticket area most is interest rates.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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