JB Hi-Fi shares spike to highest point despite Amazon Australia's launch

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JB HI-FI
The logos of Australian electronic goods retailers JB Hi-Fi and the privately-held 100-store rival The Good Guys are displayed at a shopping center in Sydney, Australia, May 19, 2016. Reuters/David Gray

Latest index shows that Australians have splurged on online purchases ahead of Christmas 2017. Amid reports of strong Christmas trading, it has been revealed that shares in JB Hi-Fi have soared to their highest point in 11 months.

It came after Morgan Stanley analysts reported “strong Christmas trading.” Its new report rated JB Hi-Fi’s shares as “overweight” and the firm lifted its near-term sales and margin forecasts for JB Hi-Fi.

The retailer’s success comes despite Amazon’s recent arrival in Australia. It was said to be driven by a “healthy technology cycle” by the iPhone X, drones and large flat panel TVs.

“Channel checks indicate that the overall retail environment improved significantly from early December and could be characterised as strong but late,” the firm said. It stated that retailers were nervous early, but consumers shopped late. This scenario has been a trend.

Morgan Stanley expressed confidence that JB Hi-Fi would be able to maintain its margins in the long term. “Our comparison of JB Hi-Fi and Best Buy’s operating metrics shows that JB Hi-Fi is a more productive, leaner model with a stronger growth outlook,” it said, according to Channel News.

Furthermore, the Morgan Stanley report stated that the country’s retail environment has gotten better since early December. The NAB said most individual sales categories accelerated over the month in year-on-year terms.

Brien McDonald, Senior Economist at the NAB, said most categories accelerated in November, Business Insider Australia reported. Among those that recorded the most rapid growth over the past year are daily deals and the homeware and appliances category.

Annual sales growth for games and toys, food catering, grocery and liquor, department stores and fashion jumped at a faster pace compared to a month earlier. On the other hand, spending in the media and personal/recreational categories has decelerated.

Based on the National Australia Bank’s (NAB) Online Retail Sales Index, Aussies have splurged on online purchases. The index saw a jump by 4.7 percent in November in seasonally adjusted terms.

That has been the highest monthly increase since December 2014. It was before Amazon opened its online showroom in December.

Some experts have shared their views about the influence of Amazon in Australia. Equity Analysts Thomas Kierath and Monique Rooney reportedly said the retailer’s launch in Down Under appears to have limited impact. It may take longer for Amazon Australia to make an impact that initially thought, Deutsche Research Analysts affirmed.

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