JB Hi-Fi Share Price Suffers Following ASX Query

JB Hi-Fi Limited’s [ASX: JBH] share price dropped by almost 9% the past week alone.

The electronic retailer’s shares are currently trading at $23.29, down from $25.57 last Tuesday.

Why has JB Hi-Fi’s share price fallen?

The initial fall came after the company released a presentation to the Macquarie Australia Conference in a trading update last week.

The presentation announced a downgrade in profit.

The fall continued after the ASX queried JB on burying the downgrade within the presentation, suggesting it was market sensitive and should have been a standalone announcement.

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The ASX queried JB on when they became aware of the information within the presentation, whether they believed it would have an impact on the share price and why they included the information in the presentation rather than a separate announcement.

JB defended its decision in an update on Sunday, stating they believed the 3% downgrade would have no effect on the share price, consistent with the ASX Guidance notes.

There was no change to the Company’s sales guidance.

JBH noted guidance in section 7.3 of Guidance Note 8 issued by ASX which suggests that should treat an expected variation in earnings compared to its published guidance equal to or less than 5% as not being material and presume that its guidance therefore does not need updating.

JBH also noted that in the FY2018 Outlook Slide the Company explained that the revision to earnings guidance was driven by short term unfavourable weather conditions and heightened price competition.

What’s next for JB Hi-Fi?

As reported by The Australian Financial Review, UBS analyst Ben Gilbert believes JB Hi-Fi is still set to soar:

JB Hi-Fi is one of the best electronics retailers globally, characterised by high sales productivity, low-cost culture and proven ability to adapt to market change,

The above said, competitive and macro headwinds are growing, and while we believe JB Hi-Fi is well placed to maintain/grow share, this will likely come at a cost with respect to margin.

Hopefully, there’s great things still to come for the electronics retailer.


Dannielle Rawlings,
For Markets & Money

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