JB Hi-Fi CEO Richard Murray has rejected claims that Australia’s retail sector is in a recession, claiming large department stores are simply losing touch with consumers.
The tech boss said David Jones has become irrelevant, leading to their own demise.
According David Jones and Myer, high rents have majorly affected their sales after the department store giants posted close to $1billion loss in sales last year.
But Mr Murray has refuted this, saying size hasn’t impacted other retail outlets such as Bunnings Warehouse and Kmart, who he claims make it work by understanding their position and customer.
DVD and CD sales at JB Hi-Fi have fallen thanks to streaming services – but vinyl record sales are booming
JB Hi-Fi CEO Richard Murray (pictured) has rejected claims that Australia’s retail sector is suffering through a recession
‘We run our own race and time will be the judge [on if there is a retail recession]. It’s no secret that department stores are struggling for relevance at the moment in consumers’ minds,’ Mr Murray told news.com.au.
He attributed JB Hi-Fi’s recent success to its ‘smaller and more agile’ business model.
Earlier this month Woolworth Holdings, the South African company that owns David Jones, had to write down the value of the department stores by $437million.
Last year, Myer posted a $486million loss, with its CEO admitting the results were ‘disappointing’.
Meanwhile, JB Hi-Fi revealed on Tuesday their net profit was up by 7.1 per cent to $249.8million, with a total of $7.1billion in sales.
This is compared to $233.2million in the previous financial year.
Mr Murray said he was pleased with the record sales and earnings, adding JB Hi-Fi New Zealand and The Good Guys showed similar results.
Mr Murray said that pricing, relevance and operating models is what creates a profitable retailer.
‘We’re not a department store and certainly department stores have their set of challenges at the moment; I wish them good luck,’ he said.
He thanked the team and said he hoped the 2019-2020 financial year would reveal similar growth.
Mr Murray said that DVD and CDs have fallen thanks to streaming services – but vinyl record sales are booming.
Queensland University of Technology retail expert Prof Gary Mortimer said JB Hi-Fi’s profits prove the retail sector isn’t in recession.
‘Food and groceries are ticking on quite well, despite price deflation, and we are now seeing a lift in those categories that are more exposed to discretionary spending, such as consumer electronics,’ he told news.com.au.
Earlier this month Woolworth Holdings, the South African company that owns David Jones, had to write down the value of the department stores by $437 million