Innovation

Heavy discounting hurts JB Hi-Fi profit

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JB Hi-Fi announced it expects profits to fall this financial year as its margins are cut by discounting.

The home entertainment retailer said in a trading update it expected to post a net profit of $100 million to $105 million in the year to June 30, down from $109.7 million in the previous year.

The company expects to post $1.3 billion in sales for the financial year.

CEO Terry Smart said he expected heavy discounting to continue into the next quarter.

“But we do not believe that this is a long-term structural change,” Smart said in a statement to the ASX.

“While the impact on our earnings is clear, as a market leader with an everyday low price proposition, JB Hi-Fi will react aggressively to maintain our market leadership.”

The retailer’s online sales are up 76% for the 12 months to April.

JB Hi-Fi NOW, the retailer’s online platform, launched music streaming for Apple and Android devices in April, with a Windows offering to follow.

JB Hi-Fi (ASX: JBH) was down 5.14% to $10.16 at 11am.

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