Principles of Financial Management

Industry Description

  1. The retail industry is a major contributor to the Australian economy. It totals around 4.1 per cent of the GDP and 10.7 per cent of the employment is provided bu them. The profit varies around 70 per cent combining all of the retail business and the remaining 28 per cent are in losses. In 2010, the average return on the capital of the retail industry was 24 per cent. The retail sales have comparatively decreased in recent times. This is due to short-term and cyclical factors like consumer buying patterns as they are spending less on retail products and focusing on multiplying their money[1].

The top competitors for JB Hi-Fi are many. They are mentioned chronologically[2]

  1. Harvey Norman Holding Ltd with 5420 employees in its workforce and a turnover of $1Billion
  2. TransWorld Entertainment Corporation with 1200 employees in its workforce and a turnover of $442 Million

Ultimate Electronics Incorporation with 2583 employees in its workforce and a turnover of $516 million

  1. Canada Computers with 1000 employees in its workforce and a turnover of $200 million
  2. Darty pic with 12,618 employees in its workforce and a turnover of $4 billion.
  3. American TV with 1200 employees in its workforce and a turnover of $250 million.
  1. On retail and wholesale industries there are many laws that are applicable. The key legislations are[3]-
  2. Competition and Consumer Act (CCA) 2010
  3. Australian Consumer Law (ACL)
  4. Commerce (Trade Description) Regulations 2016
  5. National Trade Measurement Legislation
  6. Greenhouse and Energy Medium Standards

There are some mandatory standard code of conduct-

  1. Unit Pricing code
  2. Food Standards code
  3. Mandatory Safety codes
  4. Franchising code of conduct

These industries help in setting standards for such firms in industry so that neither they nor the government gets to face any problem. The CCA helps in ensuring that the products provided by the company are not adulterated and that there is fair competition in the market. If anyone is guilty of misconduct, they are punished accordingly.[4] the ACL also ensures that there aren't any unfair contract terms of the law, guarantee the rights of consumers are managed or not etc[5].

Company Description

  • JB Hi-Fi Limited is a public company that is set up locally in Victoria, Australia. It was founded in the year 1974. The founder of this company is John Barbuto and its headquarter is located in Melbourne, Australia. It deals in retailing of sale of products of home entertainment and electronic products required by the consumer. This business is spread across Australia and New Zealand making it a total of 180 outlets. It has a turnover of $5 billion. It deals in-store and online store as well. With a working power of 12,500 employees, it has become an international business and set up its business in New Zealand. It is listed on the ASX under JBH code[6].

In the year 2018, they added another $1 billion in their pockets as the offset of hardware sales resulted in a decrease in software sales. The online hardware sales have the JB hi-Fi's communications, computers, audio, video game hardware and categories of drones. However, there was a dip in the sales of video games, music, movies etc in 2018. It was 10 per cent compared to 12 per cent in 2017.

Commercial and education solution business also gave in the revenue growth of JB Hi-Fi. It reached $500 million that year through its growth and strategies on acquisitions. The Good Guys business was not up to the mark as there were not much of home appliances sales[7].

In the financial year 2019, JB Hi-Fi Limited favoured the odds towards them by making a revenue of $7.1 billion. They exceeded their threshold of $7 billion in 2019 which they aimed in 2018.[8]

  • The Group Chief Executive Officer and Executive Director are Richard Murray since 2014. Stephen Thomas Goddard is the Chairman since 2020. The Operations Director is Peter Green since 2001. Chief Finacial Officer si Nick Wells since 2014. The Group Director-Technology is Simon Page since 2019. The Secretary and General Counsel are Doug Smith since 2010. The shareholders of the JB Hi-Fi limited are[9]-
  • Australian Super Pty Ltd with 12,741,159 equities constituting 11.1% of ownership
  • Ellerston Capital Ltd with 5,736,713 equities constituting 4.99% of ownership
  • Ausbil investment management ltd with 5,732,680 equities constituting 4.99% of ownership
  • Legg Mason Asset Management (Australia) Ltd. with 5,732,370 equities constituting 4.99% of ownership.
  • Health Employees Superannuation Trust Australia with 5,711,028 equities constituting 4.97% of ownership.
  • Magellan Asset Management Ltd. with 5,536,822equities constituting 4.82% of ownership.
  • UniSuper Management Pty Ltd. with 5,286,305 equities constituting 4.60% of ownership.
  • The Vanguard Group, Inc. with 3,168,305 equities constituting 2.76% of ownership.
  • Commonwealth Superannuation Corp. (Investment Management) with 2,691,644 equities constituting 2.34 % of ownership.
  • Dimensional Fund Advisors LP with 1,983,006 equities constituting 1.73% of ownership.

References for JB Hi-Fi Limited Analysis

Productivity Commission. (2011). Economic structure and performance of the Australian retail industry. Productivity Commission Inquiry Report, 56, 1-433.

Saretta, J. (2020). JB Hi-Fi. Retrieved from https://www.zoominfo.com/c/jb-hi--fi-limited/20611336

Business. (2020). Retail and wholesale trade industry. Retrieved from https://www.business.gov.au/planning/industry-information/retail-and-wholesale-trade-industry#:~:text=The%20federal%20government%20agencies%20and,Competition%20%26%20Consumer%20Commission%20(ACCC)

Australian Competition and Consumer Commission. (2020). Legislation. Retrieved from https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation#the-competition-and-consumer-act-2010

Australian Consumer Law. (2020). Retrieved from https://consumerlaw.gov.au/australian-consumer-law

IBIS World. (2019). JB Hi-Fi Limited - Premium Company Report Australia. Retrieved from https://www.ibisworld.com/au/company/jb-hi-fi-limited/9961/

Arboleda, N. (2018). JB Hi-Fi revenue up another $1 billion with strong hardware sales. Retrieved from https://www.crn.com.au/news/jb-hi-fi-revenue-up-another-1-billion-with-strong-hardware-sales-500096

Hughes, C. (2020). JB Hi-Fi limited total sales revenue in Australia FY 2015-2019. Retrieved from https://www.statista.com/statistics/1092516/australia-sales-revenue-of-jb-hi-fi-limited/

Market Screener. (2020). JB Hi-Fi Limited. Retrieved from https://www.marketscreener.com/quote/stock/JB-HI-FI-LIMITED-6496641/company/

[1] Productivity Commission. (2011). Economic structure and performance of the Australian retail industry. Productivity Commission Inquiry Report, 56, 1-433.

[2] Saretta, J. (2020). JB Hi-Fi. Retrieved from https://www.zoominfo.com/c/jb-hi--fi-limited/20611336

[3] Business. (2020). Retail and wholesale trade industry. Retrieved from https://www.business.gov.au/planning/industry-information/retail-and-wholesale-trade-industry#:~:text=The%20federal%20government%20agencies%20and,Competition%20%26%20Consumer%20Commission%20(ACCC)

[4] Australian Competition and Consumer Commission. (2020). Legislation. Retrieved from https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation#the-competition-and-consumer-act-2010

[5] Australian Consumer Law. (2020). Retrieved from https://consumerlaw.gov.au/australian-consumer-law

[6] IBIS World. (2019). JB Hi-Fi Limited - Premium Company Report Australia. Retrieved from https://www.ibisworld.com/au/company/jb-hi-fi-limited/9961/

[7] Arboleda, N. (2018). JB Hi-Fi revenue up another $1 billion with strong hardware sales. Retrieved from https://www.crn.com.au/news/jb-hi-fi-revenue-up-another-1-billion-with-strong-hardware-sales-500096

[8] Hughes, C. (2020). JB Hi-Fi limited total sales revenue in Australia FY 2015-2019. Retrieved from https://www.statista.com/statistics/1092516/australia-sales-revenue-of-jb-hi-fi-limited/

[9] Market Screener. (2020). JB Hi-Fi Limited. Retrieved from https://www.marketscreener.com/quote/stock/JB-HI-FI-LIMITED-6496641/company/

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