JBH is likely to receive money from a large number of subscribers into Christmas, especially for children and grandchildren presents. The concern with their report in August was that FY24 had started off slowly, which coincides with people becoming more cautious with how they use/spend their discretionary dollars. Understandably, the company didn’t provide firm FY24 guidance, but they did note a slowdown in sales for July for their larger brands – JB Hi-Fi Australia -1.8% and The Good Guys -12% – we could be in store for a period, especially after the festive season, where people try and rebuild their savings, if possible in today’s environment.
The short position in JBH has fallen from well over 8% to 6.2% since their report, as traders appear to get impatient with a stock that has largely traded sideways for three years! In our opinion, this is a quality retailer, but it may struggle to grow significantly with the current economic backdrop, but it’s not a company we would be short.
- We can see JBH re-testing $50 into Christmas, but we’re not fans at this stage of the cycle.
MM is neutral on JBH, around $47
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