Further evidence of the anxieties plaguing Australian retailers has come to light following the leaking of an internal memo at JB HiFi, which urges staff not to fear for their jobs following last week's dramatic sales downgrade.
The company last Friday dropped its sales outlook 5 percent for the Christmas period, citing heavy price reductions in the industry, specifically with flat screen TVs. Investors ran for the exits with JB's shares falling 15.3 per cent to close at $12.71, their lowest point in over two years.
In a letter to employees, sighted by CRN, JB Hi-Fi CEO Terry Smart acknowledged the company had not been immune from challenging retail conditions.
“Some retailers have closed, some are reviewing their models and many other retailers have signalled just how tough it is and are forecasting up to 20 percent decreases in their earnings," Smart wrote. He added, however, that JB Hi-Fi had not experienced that level of pain.
Smart reiterated the company’s plan to reach 214 shopfronts with six more stores, adding to the ten opened this year, to debut by the end of 2012.
Smart recognised the threat of online retail but insisted it provided JB HiFi with an opportunity to reinforce its competitive advantage as well as “security in dealing with a reputable company with a large network of stores for after sales support”.
He urged workers to concern themselves only with what they can control and not with the company’s share price, which he told employees would rise again.
Following Friday’s disappointing results, JB HiFi reported strong growth over the past six months in the computers, IT and accessories markets after a flat performance in the first quarter, along with an 80 percent jump in online sales.
The results come soon after the launch of its digital streaming music service JB HiFi NOW, for which the company has so far given a positive report card.