JB Hi Fi (ASX:JBH): With a 140% gain in 2 years, it is the ASX’s most in vogue retailer!

Few retailers have emerged stronger from the pandemic than when it began, but it is hard to argue JB Hi Fi (ASX:JBH) has not, given it is 140% higher.

While many ASX retailers’ customers cut back spending to varying degrees, this has not been the case with Australia’s largest electronics retailer, at least enough to concern investors. And the spending is continuing in FY26 – at least it has in the first quarter if the company’s latest update is anything to go by.

What many seem to forget is that JB Hi-Fi also owns white goods retailer The Good Guys and solid results from its namesake electronics stores have masked underperformance here. Could things turn around and The Good Guys contribute to growth in the business, or could it continue to underperform to the extent investors might actually worry?

What are the Best ASX Stocks to invest in?

Check our buy/sell tips

Who is JB Hi Fi (ASX:JBH)?

JB Hi-Fi is one of those companies that needs little introduction, in being Australia’s pre-eminent retailers, selling consumer electronics and home appliances. It was founded in 1974, named after founder John Barbuto and its original specialty of Hi-Fi equipment (high-fidelity stereo systems for music lovers).

In the mid-1980s, Barbuto sold the business to three former senior managers from the Tandy Corporation and they expanded it beyond its original home of Melbourne. More crucially, it expanded into CDs, DVDs and video games as well as into computers over time.

JB Hi-Fi’s ASX listing came in 2000, and today it has over 300 stores in Australia and New Zealand. In addition to the stores bearing its name, it also owns the Good Guys, having purchased it for $870m in 2016, in the aim of increasing its market share.  

Avoiding the pandemic, then avoiding inflation

JB Hi-Fi avoided a downturn during the pandemic thanks to its significant online presence that had been built during the 2010s. And it was seeing an unexpected boom from customers looking through products that would help them both work and relax at home during lockdowns.

Indeed, JB Hi-Fi grew its sales by 12% in both FY20 and FY21. It is important to note the company has stores in New Zealand that actually lagged in FY20 (declining over 5%) but rebounding in FY21 (growing by 17%). 

Many companies saw booms due to the pandemic too, only to see demand drop off – Kogan (ASX:KGN) is one company that springs to mind. Also not helping matters was high inflation that would eat into margins, even if revenues were stable.

That was not the case here. Consider the following results.

• • FY22 saw 3.5% growth to $9.2bn and its profit was $544.9m (up 8%),
  • FY23 saw $9.6bn in sales (up 4.3%) although its profit declined by 3.7% to $524.6m,
  • FY24 saw $9.6bn revenue and a $438.8m profit, and
  • FY25 saw $10.6bn revenue and $476.1m profit.

Considering it made $6.85bn in sales in FY18 and a $233.2m profit, not bad results overall when you put it into the context of several years. Yes there was a retreat in FY24, but it was corrected in FY25 with the Stage 3 tax cuts. More on FY26 shortly, but first…

The Good Guys: Has it paid off?

There has been a lot of debate amongst investors and analysts as to if The Good Guys has paid off for JB Hi-Fi. That’s a tricky question. If you judge ‘paid off’ by EBIT made, then it has recouped that amount on an individual segment basis. It made just under $3bn in revenue and $160m EBIT.

Nonetheless, its EBIT and market share has fallen in recent years from $241m in 2022. Individual halves and quarters have showed bad signs. The last time we wrote about JB Hi-Fi, we observed that The Good Guy’s sales in FY23 only rose 0.8% and 1HY24 (the first half of FY24) saw a concerning 9.9% slide

This segment was impacted by the cost of living crisis, clearly. It does appear FY25 saw a revenue bounce back, but margins remained compressed.

The irony is that if the Good Guys is doing its job, consumers’ devices should be lasting for much longer than mobile phones or computers. To those saying it is ‘underperforming’, we could question the basis for it because that makes the difference as to whether or not it is true.

If underperforming is in the sense of growth relative to JB Hi-Fi, then that is arguably true. If it is growth in its own right, this answer depends from year to year but is arguably true now. If you’re comparing it to peers like Bing Lee, that’s for another article. But compared to New Zealand…let’s just say The Good Guys could’ve done worse. Yes, we know NZ sales are growing strongly, but there has been far greater margin pressure.

FY26 has begun well

JB Hi-Fi’s last update came yesterday (October 30) when it revealed sales growth figures. Total growth was 4.1% with comparable sales growth of 0.7%.

Just looking at Australia, it was 6% overall and 5% on a comparable basis. In New Zealand, it was 39.3% with 24.3% comparable growth – perhaps the economy there is turning. Looking to the Good Guys, sales growth was 2.5%, down from 5.3% 12 months ago. The company reported sales were in line with expectations as it entered the Black Friday/Christmas trading period.

The challenge is that there are no Stage 3 tax cuts this year.

Analysts covering JB Hi-Fi stock are actually pessimistic about its future direction with a target price of A$101.54, below the $113.52 price it is at now. Nonetheless, analysts expect both top and bottom line growth. For FY26, they call for $11.3bn revenue and $4.64 EPS (which is a $507.2m profit). Then in FY27, $11.9bn revenue and $4.98 EPS (a $544.3m profit).

The company’s multiples are 12.5x EV/EBITDA, 24.3x P/E and 3.7x PEG.

So should you buy JB Hi-Fi shares?

In the end, JB Hi-Fi is a solid business with a strong footprint of consumer electronic stores that (as we’ve seen of late) are solid enough to keep the Group’s top and bottom lines growing.

So while we don’t think retail is the best segment to invest in, we do think this company is one of the safer options out there.