JBH - JB Hi Fi

[winner69]

The footnote on the note that went with the full year announcement said it all

JB - you've done it again

Fantastic result really - revenues up 36% to $1.3 billion and profit up from $26M to $40M with guidance that sales will go to $1.7 billion in F08

After a 3% rise the day before JBH shares climbed another 12% yesterday to close at $11.35

The $11.35 is about 20 times F08 earnings so still pretty richly priced.

Might need to buy back the shares I sold at $11.80 when trailing stops kicked in ... and start again with JBH after seeing what happens over the next few days ... after all the last JBH trade was very successful

The old JB Hi Fi thread here
http://www.snitzforum.sharetrader.co.nz/topic.asp?TOPIC_ID=18949&whichpage=3&SearchTerms=jb

[winner69]

Reached $12.21 mid July

Lost 20% during the 'market collapse' early August - low of $9.75

Up 45% since then to close yesterday at $14.23 (up 16% from the previous high in July as well)

Market surely liked the last result --- has real positive monentum again --- unlike other fav of mine in TRS which also fell by 20% in the 'market collapse' but is still 9% less than the July highs

Valuations don't appear to matter these days ---- as somebody said on another thread momentum is the key

[JBmurc]

Till the momentum stops
IMHO current SP 14.50 is priced in at least another 2yrs of 40% growth in advance,thats if you compare to the retail sectors average P/E 16
-if your extremely bullish on JBH and believe it should command a 35+ P/e yeah more SP growth to come yet when you compare it to the #1 ASX retail stock WOW p/e-27 yeild 2.7 mmmmmmmmmmmm Food vs Hi-fi

you certainly wouldn't buy JBH for it's yeild .7%

Now if you compare it to HVN who also makes 38cps and strangely pays the same 11cps divie yet there SP is $6.09 P/e-15 yeild 1.8%
-HVN by far has a better Asset value backing
-HVN had 28% growth to JBH 40%

-From most aussie posters HCopper etc that are bullish on JBH there main reason is they love shopping there and love the company I personal hope for there sake and other JBH holders that the 20 top major holders who hold 70%+ of JBH shares don't decide to take some profits.

[BRICKS]

CANT see this going to much longer feel the books are tickled, Go into a store very few buyers but much worse there prices are tops even dearer than Dick Smith which is very cheap in there Mega stores. Right about the major holders if they let go down it will tumble
feel somehow they are trying to unload so BUY with PERIL..

[JBmurc]

JBH close to breaching $15 Hard to believe what buyers are thinking ATM

Abit From the-Intelligent Investor- djs - David Jones Limited---RETAIL stores----

There’s no doubt that the company continues to do well, and we don’t see any reason for that to change in the near future. However, the share price takes account of these prospects more than it reflects the potential risks, such as competition and high consumer debt.-SELL--

DJS-reported a 30% rise in nett profit
-P/e of 10 yeild-4%

And this is a SELL whats that make JBH the short of the year(I see another Analyst has a REDUCE on JBH)

[winner69]

Well JB it closed over the $15 mark

Momentum is a powerful force eh ..... may as well enjoy the ride

Even at $15 is only about 25 times F08 forecast earnings (not that much different from WOW) so might even go higher .... or hang around this level for a while ... who knows

Funny times .... maybe exuberance still prevails .... even old time fundamentalists would be horrified at a PE in excess of 25 for WOW .... no matter how brillantly it is run and performs.

Nothing seems to be 'normal' so the only way to go is with momentum ... follow the market noise no matter what ..... but watch those charts closely.

[winner69]

Hwy JB ..... JBH noe over $16 ....... now thats real posituve momentum

[JBmurc]

Well never been that good at picking -compaines to short- still believe JBH's major instos holders would be looking at taking some profits soon great time to unload on the postive Xmas market spin

-Have to take a short soon Once the momentum runs out $17-$18 maybe sooner
forward P/E must be close to 30 nearly twice the sector average

[winner69]

Hit 1625 .... another record high even after last weeks panic drop to 1530 ........ relentless interest in JBH at the moment ..... reminds me when Fishers keep on buying and buying regardless of the price .... maybe it is them for Barramundi ... who knows ..... but the upward rise continues

JB .... if it is Fishers wouldn't be a good stock to short would it?

[soulman]

Shorting is dangerous. Just imagine shorting JBM last week or shorting any of the miners last week including BHP and RIO and all the mid caps miner.

I agree with you to short CBA last week but the shares just kept on rising for no reason and pushing their valuation way stretch. I suspect a mini correction coming and if our dollar goes to parity with the US, that spells trouble.

[winner69]

How about that .... nearly hit $17 and closed not that far off.

Obviously a pretty exciting AGM with plenty of bullish talk .... they said sales up 33% this year but we already knew that ..... so behind the scenes a lot of nudge nudge wink wink and its looking more like 50%

JBH fell under $10 in August .... better than nickel stocks at the mo

[winner69]

Currently not in JBH but post election hype certainly gave JBH a decent boost (+6%) today .... seems to be very volatile this one with such falls and rises not that uncommon over the last week or so.

Was working in Melbourne last week and that Bourke St store is a veriatable goldmime. Been there on many occassions over the years but I never seen it so busy as last week.

Popped in several times and there there were masses there everytime .... lunch time ... late afternoons .... and the weekends are just another story.

What struck me is how they have moved away from just CDs and DVDs .... only about half the store but still plenty of DVDs going out .... but seem to be pretty heavy demand for the high value items like laptops / printers and the other digital toys. One of the young keen assitants said he had sold 6 laptops 'this week' and it was only Wednesday morning ....... mostly to 'young chicks' he said ... a lot of them seem to have plenty of money he told me and was proud he manages to always up sell them.

If this store is indicative of what is going on than 33% sales increase seems a give.

There's another little store in one of the side streets selling the plasma TVs and the like and there were people trying out that stuff as well.

have to admire the low cost of doing business model. Fill a basement (that is what the Bourke St store is) with what punters want and have plenty of staff to help out the actual store environmrnt doesn't really have to matter does it

Just my observation for what its worth ..... good company worth trading it shares as appropriate

[JBmurc]

Well never been that good at picking -compaines to short- still believe JBH's major instos holders would be looking at taking some profits soon great time to unload on the postive Xmas market spin

-Have to take a short soon Once the momentum runs out $17-$18 maybe sooner
forward P/E must be close to 30 nearly twice the sector average

---Wish I took that short now JBH last price $12.58
I see CBA got hammered as well of late

[BRICKS]

CANT see this going to much longer feel the books are tickled, Go into a store very few buyers but much worse there prices are tops even dearer than Dick Smith which is very cheap in there Mega stores. Right about the major holders if they let go down it will tumble
feel somehow they are trying to unload so BUY with PERIL..


AND IT DID NOT..

[winner69]

One of the stars of the ASX today ...... in spite of the gloom early on was ahead of the game all day and finished up 5%

[winner69]

Great result for H1 - $40M odd in half year more than the full year last year

Should result in FY eps >60 cents - analyst forecasts 52-58 cents so ahead of their expectations

Should be good for shareprice but like UGL yesterday making heaps of money is not always good

Lets see what happens

[winner69]

No posts for over a year but JBH still pumps out the good news ... more and more new stores .... cost of business remains low .... and increasing profits.

Even though a retail stock JBH mirrors investor sentiment perfectly .... the fundmantals of the business of not changed ... nor has its financial performance .... but its shareprice has moved with the changes in market sentiment.

Very uncomplicated chart ... forget about the little up and downs ... just put striaght line between the tops and the lows and a beautiful w shape appears ... down 45% odd early last year when retail was doomed .... up 50% when the world wasn't going to end ,,,,, down about 50% when the world was about to bought down by failing banking system .... and then up 100% plus in last six months ...... what a stock to have trading these ups and downs ..... and funny enough each day JB Hi Fi has gone selling plenty of stuff and gone on opening new stores ..... and gone on making even more money .... not even knowing the world was in crisis

FA says JBH a great company with a great business model ..... TA follows market sentiment .... and says when you should be in a a stock or not ..... and at the moment it says be in .... neven know might be $20 in a few months

Anybody been in the NZ stores .... great eh ... saves me having to drop into the ones in Aussie to get my JB Hi Fi fix

[The Big Ease]

It has been a phenomenal retail success story.
Missed it all.

[winner69]

My research group, iASX, has just published a new target price for JBH of $15.9, which I'm sure you'll find proves to be much more meaningful than flawed DCF valuation...

http://iasx.weebly.com

Best,
iASX

So instead of flawed DCF valuation you go with a guess which is a blend of fundamental and technical things

Website pretty vague - tell us more how you arrived at $15.90 for JBH

[winner69]

hey spoonman .... that $15.90 getting closer by the day

After $15.90 whats the next target

[dragonz]

If it breaks the 15.25 resistance then $17. 81 is the next level ( from 4 year chart) according to stoxline

[winner69]

If it breaks the 15.25 resistance then $17. 81 is the next level ( from 4 year chart) according to stoxline

Close at 1525 a 52 week high and not that far off its all time high of $16 something

Up 120% since Xmas is quite a feat ..... just highlights how sentiment rules the market .... JBH is doing now exactly what it has been doing for years ... selling heaps and opening new stores with a great business model

Very simple chart as well .... and that figure close to $18 will be achieved this year

[Dr_Who]

I like the business model of this company.

Reminds me abit like Noel Leeming when it was first started out in Queen st with only one shop.

[winner69]

If it breaks the 15.25 resistance then $17. 81 is the next level ( from 4 year chart) according to stoxline

..... broken that 1525 and heading to that 1781 now dragonz

Great business model ... still putting new shops down .... and heaps more upside beyond that 1781

[dragonz]

..... broken that 1525 and heading to that 1781 now dragonz

Great business model ... still putting new shops down .... and heaps more upside beyond that 1781

Its unbelievable the % of sales that are short sales for this stock. Consistantly between 10-20 %. Ouch. Why would anyone want to go against such a strong trend. Oh well I suppose it adds liquidity but goes to show that there's some legs left in this baby yet.

Disc. Do not hold the stock :(

[winner69]

Another great day for JBH and closed at 1640 after reaching 1670 odd ...... another day or two and shareprice will hit record highs ..... and jeez things are still tough in retail land in Aust/NZ ... what'll happen to sales and JBH profits and shreprice when thigs get back somewhere near normal

[The Big Ease]

Its unbelievable the % of sales that are short sales for this stock. Consistantly between 10-20 %. Ouch. Why would anyone want to go against such a strong trend. Oh well I suppose it adds liquidity but goes to show that there's some legs left in this baby yet.

Disc. Do not hold the stock :(

imagine the buying pressure when they have to cover their positions?!

with all that selling pressure, it still pushes on. Not bad ;)

[POSSUM THE CAT]

One large branch of its NZ purchase closing down. That I know about because it is local. (maybe the short sellers know something)

[winner69]

JBH went over the $17 mark the other day wasn't that far off it's all time high .... but taking a bit of a breather

Maybe a bit ahead of itself but I reckon $20 by Xmas is likely as Aussies and Kiwis realise they can start indulging themselves ... and buy more stuff from more and more JB Hi Fi stores

If there are that many shorts around they must be hurting

[winner69]

What more is there to say ... except plenty more growth before JBH reaches the 'mature' stage



Tills ring in new king of retailing

Stocks in Richard Uechtritz's JB Hi-Fi chain are trading at record levels. Photo: Paul Jones

James Kirby

August 1, 2009

FOR a generation Harvey Norman’s Gerry Harvey was Australia’s greatest salesman, but the king has lost his crown. You may not know his replacement Richard Uechtritz by name but you’ll know his company. It’s called JB Hi-Fi.

Touted as a retailing genius since the 1970s, the impish, brilliant billionaire who runs Harvey Norman was never going to give up his title easily. From outsmarting stockbrokers to doing his own radio advertisements to second guessing every other retailer, Gerry Harvey (partner Ian Norman retired years ago) never put a foot wrong. Until now.

Call it hubris, call it a bridge too far, but Harvey finally stepped on a landmine with an ambitious move into Europe.

Unfortunately, he chose Ireland, where the group’s chain of 14 stores was struggling to make money during the past four years.

Now, when it should all be coming right, Ireland has plunged into the worst recession in western Europe, and Harvey Norman’s Irish operation is heading for a $40 million loss, with sales dropping more than 20 per cent.

And Harvey Norman Australia should have been popping champagne corks after the Federal Government’s stimulus package poured money through the doors of every department store. But it’s not working out that way.

As Harvey Norman faced ‘‘sell’’ notes from stockbrokers, JB Hi-Fi stock was trading at record levels last week.

Uechtritz, who is more than a decade younger than his arch-rival, first came to prominence with his Rabbit Photo chain, but it is the JB Hi-Fi chain that has fulfilled his grand ambitions.

There are — inevitably — some similarities between two retailers operating in the same space: both men are strategists with complete power inside their own operations. Both operate far from the bright lights — Uechtritz in an unmarked office in suburban Melbourne, Harvey in a factory warehouse in Homebush, Sydney.

Both created not just a retailing chain but a lifestyle illusion — Harvey Norman is supposed to be cheap and cheerful, though it is often not the cheapest for many goods and services; JB Hi-Fi, with its blackboard prices, is meant to have a ramshackle charm, but it’s actually a stockmarket-listed company, with the folksy touches devised by Uechtritz in head office.

There the similarities fade. Harvey is flamboyant, mischievous, a serious racegoer who lives in relatively modest circumstances. Uechtritz is camera shy, studious, his only obvious indulgence his house. For investors the similarities between the two stocks are fading, too. Among retailing stocks the number that really matters is sales. In the 12 months to June, Harvey Norman franchisees managed sales growth of 7 per cent while JB Hi-Fi was almost four times higher at 26 per cent.

Fund manager Roger Montgomery estimates that Uechtritz’s ability to exploit the original Rudd Government household stimulus package is unrivalled. He says about $500 million of the $12 billion stimulus went straight into the tills at JB Hi-Fi.

For many years Harvey Norman always had the highest rating among the listed retailers — now it’s JB Hi-Fi that commands a premium price earnings ratio, which signals future profit growth.

JB Hi-Fi is trading on a price ratio of 22 times; Harvey Norman is trading on 16 times.

Can Gerry Harvey regain his throne? I don’t think so (and I am a fan; I wrote his biography a few years ago).

The truth is, Uechtritz and JB Hi-Fi are where Harvey Norman was in the mid-1990s. It’s all to play for, and Uechtritz has yet to put a foot wrong.

http://business.watoday.com.au/business/tills-ring-in-new-king-of-retailing-20090801-e570.html

[winner69]

Better send another post to myself

JBH full year profit at $94.4m exceeds earlier guidance (of course under promise over deliver is the name of the game)

Sales up 27% ... even same stores sales were up 11% ... gross margins were held .... cost of doing business down .... result increased EBIT margin of 6.1%

NPAT up 45% .... and dividend up 69%


Even says sales for 2010 will be up 20% to $2.8 billion (big business eh)

Hold margins and thats NPAT of at least $120m next and remember the under promise over deliver mantra .... just imagine what the result will be if the OZ economy takes off

JBH shareprice has to well north of $20 next year ..... so even if the price has up and down a bit recently why sell now ... and plenty left for latecomers

[winner69]

Even so lost $5m EBIT in NZ but once they get a full head of steam up and improve margins and get more mass that'll soon turn around ..... a bit of a extra bonus

[winner69]

Great presentation
http://stocknessmonster.com/news-item?S=JBH&E=ASX&N=321730

[macduffy]

Don't like you having to talk to yourself, winner, so here's another tuppence worth.

Agree that that's a great result! Particularly in current economic conditions. Hard to see any Aust/NZ retailer coming out with anything close to JBH.
With earnings at 88cps for the half the P/E doesn't look so way out.

Are you holding?

Disc: Not me, mores the pity!

[winner69]

Have always believed the JBH story and it has some time to run

This is the 3rd great run I've had with this share over the last 3 years or so

A great example of where fundamentals and TA go hand in hand .... believe the fundamental story and let TA tell you when to buy .... just follow a medirm term MA

Beautiful chart in this context .... Phaedrus would be proud of me ... wouldn't be surprised if this wasn't one of his favourites and doubled his money as well this year

[brettdale]

May have to look at this stock, I know a lot of people who talk up this story, so they must be doing something right.

[Phaedrus]

This chart gives an example of a "medium-term" moving average being used to monitor JBH trends, as suggested by W69. Four indicators are featured here - all have been very profitable and historically they have given reasonably well correlated signals. Generally, they have fired in the following order :-

(1) OBV trendline break.
(2) Price trendline break.
(3) Trailing Stop hit.
(4) Moving average crossover.

Trailing Stops have been discussed quite a lot on ST recently. You can see from this chart that, while they work (and work well) it is not hard to find indicators that outperform them.

JBH has been an indifferent performer in the long-term. (The current shareprice is much the same as it was nearly 2 years ago). By contrast, anyone trading the "medium-term" trends would have made handsome profits. JBH has relatively low liquidity and this tends to increase volatility. Such stocks need plenty of room to breathe. For example, a Trailing Stop of anything less than about 17% would be too tight. You would be flicked out prematurely and be left watching the ongoing uptrend from the sidelines.

http://h1.ripway.com/78963/JBH811.gif

[winner69]

Theres an interesting slide near the back of that presentation that has JBH profits over many years overlaid with the shareprice (I'll have to learn to how to post pictures one day)

Looking at that just highlights how market sentiment can be so fickle .... on financial performance the shareprice should never have dropped to the low 700's ,,, but it did and that gave some the opportunity to nearly double their money this year

One of {haedrus's long term charts (say from 2004) where he takes the noise out and overlays straight lines would be interesting for punters to see .... a (bit wonky) W but beautiful

[winner69]

Shareprice well into the 1800's now .... jeez nearly hit $19

Maybe $25 should be the target by Christmas now .... esp if green shoots start growing into a rain forest and people start buying again

Almost like boom times again on the High St .... far from it but JBH doing OK

[macduffy]

Interesting take on JBH ( and HVN and Clive Peeters) from Robert Gottliebsen.

http://www.eurekareport.com.au/iis/iis.nsf/lpages/RWIE-7N92AE?opendocument

[NZmale]

hey guys... is it too late to get into this now... it was definately on the radar but unfortunately it went off at the wrong time!!

thanks

H J

[voltage]

good stocks always keep on performing

[winner69]

In spite the world's sharemarkets apparently being in free fall yesterday JBH had it's highest close ever

And today is still showing considerable strength .... and what we want from here on is less volatility and a more steady rise to $19 ... then to $20 ... and then to well you guess

A business model that essentially driven by store footprint * profit margin .... and while store footprint increases so will profits and so will the shareprice

[winner69]

Still hitting all time highs .... that $20 not far away now

Wonder what the short position is at the moment -- those shorting at $14 / $15 must be hurting

[winner69]

Upbeat AGM and everybody happy

Said 20% increase in sales to $2.8 billion this year .... that means more than 20% increase in profits

Same stores sales really strong .....new stores opening at pretty fast rate

Got excessive amounts of cash so some capital management on the cards some time (special divie or something)

That $20 shareprice this month ..... what price by Xmas

[winner69]

That $20 shareprice this month ..... what price by Xmas

After yesterdays action when it just about got to $21 soon after opening before closing at $20.50 the question now is ..... what price by Xmas

[Phaedrus]

One of Phaedrus's long term charts (say from 2004) where he takes the noise out and overlays straight lines would be interesting for punters to see .... a (bit wonky) W but beautifulHere you are W69. I've tried very hard not to spoil it with an overlay of TA graffiti. To me, 3 points stand out:-

(1) The incredible precision with which the longterm tentative trendline was eventually confirmed. (Blue arrow)

(2) The classical "Double Top" at the 2007 peak. Everyone knows these are Bearish - right?

(3) How hard it was to beat simply "buying and holding" for the first 4 years..... and how easy it was to beat "buying and holding" over the last 2 years.

Times change eh?

http://i602.photobucket.com/albums/tt102/PhaedrusPB/JBH1016.gif

[winner69]

Thanks Phaedrus

I like this adaptation of your chart .... takes the day to day and week to week 'noise' out of the equation and puts one focus on the underlying trends - less stress I say

Great example of playing the major trends

[winner69]

After yesterdays action when it just about got to $21 soon after opening before closing at $20.50 the question now is ..... what price by Xmas

That post was only a few days ago .... jeez nearer to $22 than $21 .... maybe $25 by Christmas .... maybe even more if the Christmas shopping season is a really busy one

[h2so4]

Thats pretty amazing up over 6% today. Just another ordinary day for the new darling of the sharemarket. Can we all expect a gift from Winner69 in our Xmas stocking this year?????:)

[winner69]

Thats pretty amazing up over 6% today. Just another ordinary day for the new darling of the sharemarket. Can we all expect a gift from Winner69 in our Xmas stocking this year?????:)

A dud day on the ASX but JBH up nearly 1%

Nearly hit that $22 again ... any day now .... and then on to $23 ... and then $24 .... and the $25 by Xmas

Got to stop sometime so keep an eye on those charts .... but allow for pretty high volatility ... like it went below $20 the other day .... so don't worry too much about sudden drops .... just watch the big trend

[winner69]

Gerry the Aussie retail guru says Xmas will be a boom time ... well said Gerry ... and JBH gets to $23.50

Probably over $25 by Xmas

Please Gerry ... more updates please .... generally if Harvey Norman is doing well JBH is doing better

[winner69]

Phaedrus - if you are lurking I confess I am not being showing the tarding 'discipline' I should be

At $21 JBH is below my calculated ATR of $21.77 and worse still is 12% down from its highest close of $23.62 - which means I should be selling

But has the DB chart shows it hasn't quite broken the MA90 line .... and because I am sure that they will come out with some good news about December sales and profitability (CEO was reported in press as saying post Xmas sales better than expected and made up for a bit of a lull pre Xmas) .... and because JBH is a great comoany .... I am still holding

Shareprice going up today on a down day for the market .... thats good

So P .... it is a close thing .... but I promise you that at $20 I will sell

[Jay]

Yes w69, me holding to for the very same reason, although no doubt a lot less than you and I got in later than you did.
The last trigger would be the 15% trailing stop at $20.07 by my calculations
The RSI must be (we hope!) near the turn around point as well (going back up that is).

[h2so4]

Winner I can tell you they would have had a bonanza Xmas. I was speaking to an independant in the same line and he has had the best December in 30 years!!!!!!!!!

[winner69]

Winner I can tell you they would have had a bonanza Xmas. I was speaking to an independant in the same line and he has had the best December in 30 years!!!!!!!!!

Thats what i think ... when Gerry Harvey gets excited about things you know things are booming .... and when harvey Norman do well JBH do better

Gerrys the man

[h2so4]

Thats what i think ... when Gerry Harvey gets excited about things you know things are booming .... and when harvey Norman do well JBH do better

Gerrys the man

Not too confident about the sp. Even at todays price JBH is valued at 2.2b. I just wonder how long other shareholders can hold on? Hope I'm wrong.

[Phaedrus]

The two obvious Sell signals shown here were preceded by an RSI Bearish divergence and followed by many other Sell signals - but these two alone would be enough for a truly devout technician. Note how many times the OBV trendline was confirmed (with surgical precision!) before being broken.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/JBH113.gif

[h2so4]

The two obvious Sell signals shown here were preceded by an RSI Bearish divergence and followed by many other Sell signals - but these two alone would be enough for a truly devout technician. Note how many times the OBV trendline was confirmed (with surgical precision!) before being broken.



...crikey I hope someone doesn't drop the scalpel.:D

[Jay]

There was a period late Nov early December where the RSI & momentum was declining, the OBV was going up and the price was going sideways to down -am I right is saying that is classified as divergence - bearish

[Phaedrus]

In an uptrend, a Bearish Divergence is formed when the price is making higher highs but an Indicator (RSI or Momentum in this instance) is making Lower highs. See chart :-

http://i602.photobucket.com/albums/tt102/PhaedrusPB/JBH114.gif

There have of course been other bearish divergences over the course of this year-long uptrend, but none of these lead to a shareprice drop large enough to trigger any confirmatory sell signals - so no exit. It is not good practice to act on the basis of a single unconfirmed signal.

Footnote : Conversely, in a downtrend a Bullish Divergence is formed when the price is making lower lows but an Indicator is making higher lows.

[Jay]

Thanks Phaedrus

As always your charts and education are very much appreciated

[winner69]

Not too confident about the sp. Even at todays price JBH is valued at 2.2b. I just wonder how long other shareholders can hold on? Hope I'm wrong.

Market cap of $2.2 billion reflects size of company .... after all sales are heading close to $3 billion financial year this year .... and even more in 2011

[h2so4]

Market cap of $2.2 billion reflects size of company .... after all sales are heading close to $3 billion financial year this year .... and even more in 2011

Yup sales are increasing and have increased every year, I'll give you that, but I still can't get my head around the huge market cap for this company. I think the market is being overly optermistic with JBH.

[Jay]

Price down! :confused:

Was it already priced in, or will the sp climb again with the impending divi, although the record date is 17th Feb (I think), so not long to go.

Disc: Have not ready read full report as yet

[macduffy]

There's a fair bit of reaction to the change of CEO in today's SP slump.

A hard act to follow!

:cool:

[Jay]

There's a fair bit of reaction to the change of CEO in today's SP slump.

A hard act to follow!

:cool:
aah missed that somewhere!
Have they mentioned anything about the next 6 months as yet?

[macduffy]

Company is "cautiously optimistic" on prospects for the full year.

Confirmed guidance of 24% to 27% increase in NPAT on the prior year.

Above is included in the profit announcement.

;)

[winner69]

My estimate is $3 billion in sales and NPAT of $130-$135m .... about 40% up on last year

If so a shareprice of $19 is only a forward PE of 15 ... cheap as

Looks like I be buying back in again sometime .... soon

[soulman]

A chart needed here. The uptrend is gone and a new downtrend has been established. I would be interested at $15.

[winner69]

A chart needed here. The uptrend is gone and a new downtrend has been established. I would be interested at $15.

Yes Soulman .... definitely been in a downtrend since early December now and the action over the last day or so has seen the decline accelerate quite markedly

Sign of the times but JNH is a great medium / long term trading share as it seems to hehave impeccably on both the way down and the way down

Great company though .... great financial model returning about 50% pa on invested capital

[h2so4]

My estimate is $3 billion in sales and NPAT of $130-$135m .... about 40% up on last year

If so a shareprice of $19 is only a forward PE of 15 ... cheap as

Looks like I be buying back in again sometime .... soon

I was surprised to see you jump ship? :)

After JBH fantastic result I would think anything under $20 would be good buying?

[Huang Chung]

Roger Montgomery seems to still like the stock, although in an interview last week, he seemed to be indicating a $15 price tag would offer a better margin of safety. Can't see it going back to those levels though....

[h2so4]

Roger Montgomery seems to still like the stock, although in an interview last week, he seemed to be indicating a $15 price tag would offer a better margin of safety. Can't see it going back to those levels though....

I dont think it offers any margin of safety.......$15 would be close to its intrinsic value.

I was just kidding about $20...:D

[h2so4]

Winner I can tell you they would have had a bonanza Xmas. I was speaking to an independant in the same line and he has had the best December in 30 years!!!!!!!!!

Well I can tell you he has just had a record breaking June.

[winner69]

JB Hi-Fi posts record profit

What else would you expect - great revenue growth and increased margins

Maybe the shareprice will go over the $20 again

And they expect a 17% increase in sales in F11 to $3.3 billion - that should deliver a $140m NPAT next year or $1.26 a share so at $20 about 16 times future earnings .... so after all this becoming fairly valued?

Wonder if it will get rerated again and the earnings multiple blow out to 25 again .... watch those charts

[jeremyhowell]

Hey sorry, just jumped in the middle of this discussion. :-)

Volumes up, and the price is about to hit the lower BB, so me thinks that opening a couple long positions wouldn't be a bad idea? I have just started trading, trying to learn all I can from others, how far off is my conclusion?

http://t6.md.it-finance.com/MDFlash/tmp/img_12813102728173.png

[winner69]

I don't think you will regret doing that at this point in time

But keep an eye on the charts .... while the JBH story remains unchnaged )even more double digit growth) market sentiment can

In participation of this result shareprice was about $24 last December .... no the result has been delivered and there's promise of more maybe $25 is a short term target .... thats 25% plus a divie along the way

[winner69]

Hey sorry, just jumped in the middle of this discussion. :-)

Volumes up, and the price is about to hit the lower BB, so me thinks that opening a couple long positions wouldn't be a bad idea? I have just started trading, trying to learn all I can from others, how far off is my conclusion?

http://t6.md.it-finance.com/MDFlash/tmp/img_12813102728173.png

Hope you got in jeremy ... JBH up nearly 10% from the morning of the annual result announcement

Still plenty of growth from store expansion and if aussie can sort out therie political mess and get things back on track the shoppers hopefully will be out spsnding up big again on TVs and computers etc

I look at JBH this way ..... when the market is rising steadily most stocks go up but JBH is one that will always go up faster

[h2so4]

Interesting observation on Sunday morning...........customers waiting outside for the doors to open. Consisdering they are not a bank and considering Big W and Myers were already open, I think it says something about their moat.

[winner69]

JBH getting a bit of press in NZ

http://www.stuff.co.nz/business/4648857/JB-Hi-Fi-lifts-performance-in-New-Zealand

Cmon NZ 'mums and dads' - buy JBH now - better than waiting for some power stations

[percy]

JBH getting a bit of press in NZ

http://www.stuff.co.nz/business/4648857/JB-Hi-Fi-lifts-performance-in-New-Zealand

Cmon NZ 'mums and dads' - buy JBH now - better than waiting for some power stations
I would rather wait for the power stations myself.Retail too hard a work.If you own a power station you will be able to take hot showers winner69,rather than having to take more cold showers.!!!!

[winner69]

Carnage tomorrow after the sneaky profit downgrade after the market closed today.

EPS in 2012 likelt to be about 110 to 120 so shareprice tomorrow likely to fall to 1300 .... maybe 1200 if punters are really pissed off

Time for another trade sometime next year methinks .... chart has always told you when to be in and when to be out .... and the zig zag might be about to turn the corner again

Growth still there for JBH .... things will be OK ... sometime

Percy - waiting for the power stations a good call .... but when the power stations come up for grabs JBH will be cheap as .

[winner69]

Mr P always liked the way that JBH behaved ... chartwise

Here's my crude attempt to keep things simple

[Huang Chung]

This is what I don't get with charting. You've got the arrow pointing down (which the results would suggest is right), but you could easily draw a line across the low points at 2007, 2009 and now, suggesting that it's reached the lower trend line, and presumably should bounce from here.

Seems like there are too many ways to view the tea leaves....

[buns]

I spent all of 5 seconds thinking about TA before reaching that exact though HC - since then I haven't considered the merits of TA once and feel my time is better spent understanding the company.

However find one post where one refers back to a message saying the trend actually went the other way. You won't, instead you will only find "I told you it was trending that way ages ago, of course it will carry on.."

I probably shouldn't have opened up this can of worms, especially on a page of a stock with all the things you look for in fundamental analysis.

I have no doubt the value of JB will increase for the next 3-4 years, but the only reason I'm not touching them sub $13ish is because I don't know what ROE's they will manage past this point (Aussie maturity), they will be stupidly cashed up and with growth in the blood I worry they will divert and invest into something silly. I'm not willing to invest on management decisions.

They are already at the stage where there is no room for tier 1 stores, nearly all are tier 3's which don't return much and are more risky. However over the next few years you will see profits from the 1 and 2's they opened 1-2 years ago.

Great company.

[Jay]

Latest announcement are not going to do my ASX Comp aspirations much good!
Lucky I do not hold at present

[winner69]

Buns - yes great company

JBH a great story - as seen by the growing EPS over the years but like all good stories this has to slow down sometime. Of course one can calculate valuations / intrinsic value or whatever from the fundamentals

TA however shows the sentiment of the market - essentially how much are punters are actually prepared to pay for JBH earnings at any particular point in time

As you can see from the chart attached punters are prepared to pay plenty .... and sometimes not very much - the driver not being JBH's own performance but all those things outside JBH control like perceived market risk and whether the world economies are going to fall over or simple things like whether equities are a good investment class.

The chart shows JBH shareprice and earnings history eh .... like the saw blade lines on the previous charts there are times when you want to be in a stock like JBH and times when you don't to be in .... and maybe after the red line goes down heaps today it might turn early next year and head back to somewhere that reflects earnings

That's my story anyway

[winner69]

I think getting some at the open at 1305 was a great entry price ..... only time will tell

Might have to go down the local JB Hi Fi and but some Chrissy presents now

[winner69]

I think getting some at the open at 1305 was a great entry price for the long term..... or a mistake a little loss in a short space of time .... only time will tell

updated ........

[buns]

JB is pretty good value about now - I said yesterday they would be if they dropped to these levels but something else has changed making them even better.

At first glance today’s announcement looks poor, but really it is fantastic.

JB itself has down nothing wrong, there strategy hasn’t stopped working, none of their competitive advantages have weakened. JB has been hit in the short term as its competition struggles and sells products below JB's prices. As everyone knows, no one gets even close to running their business as cheap as JB, so for someone else to lower its price below JB its probably doing so at a loss - they actually state they are seeing a lot of this.

This has been forced upon because of JB's dominant position in the market - yes, they bought today’s announcement on themselves! Funny when you think about it.

Long term, you can't keep selling products at losses, your fixed costs will catch up with you and run you down. JB is running these guys out of business, and will soon be a much larger player.

[drillfix]

Some more downside to this if you ask me. (technically) which I would say about $12.00

Dont really know the stock but when they say things like JB to change the way Australians to listen to music, I mean what a load of crock. A subscription service that can already be had by anywhere in the world, or users that download the music for free anyway whom then have it all the time, with them or where ever or when ever they choose to listen.

Why the (huge) Gap Down? (like $2.00) That move seems to be technically following the previous months lows and is text a book open.

Now the stock seems to have no S/R except the high of the day @ $13.40 but could eventually drift down to 12.00

The daily indicators on DMI are stretched a part and the Wiliams is showing oversold as well which can remain this way.

A warning of the OBV reaching a newer low or a break down would be an obvious sign of Distribution going on so take caution.

RSI dropping down to near 20 from 40 as well, another not good sign.

Phaedrus, had he been here would be throwing the warning bells left right and centre and if anything, we must try to hear his voice or Charts in our heads, remembering what he has said numerous times.

Here is a chart: (to the hard right side, intraday in the middle and Futures to the left)

JBH Intraday and Daily > http://www.imageurlhost.com/images/ixl5ww0ex1afcfpxnq04_JBHintra.png


Winner, this post is not to have a go at anyone, but to have some technical input from others.

Hope you have a stop in place for any trade be it short or longer term.

Good luck~!

[buns]

Over a 14% drop now...- so no JBH is worth well over $200m less than it was yesterday?

Lets look at these numbers - EBIT for H1 will be down 5%?, lets assume the FY will actually be down 8% - that equates to a $15m drop in EBIT - and probably about $10m of cash. As I said above, this is a good thing for the long term so lets ignore FY13 +

$200m v $10m?

However, JBH makes money with its retained earnings, so assume JBH pays would have paid out half of that $10m, and invested the rest at 20% - you could say this loss is worth about $30m odd to shareholders

$200m v $30m?

Simple equation that one.

[Huang Chung]

Unfortunately, once in the dog house, they're destined to stay in the dog house for a long time it seems. Another former high flyer, The Reject Shop (TRS) especially comes to mind.

[Halebop]

I think W69 was correct earlier and TA called it right. JB is a very good company. Respect their cost structure and simple business model. However, lower same store results suggests fatigue or competition or a product selection/pricing miss. This is not condusive for a rating higher than market. Don't fall in love with it. Your only job is to make money from it. In a low growth / share market recession environment the market is willing to pay up for outperformance but will do the opposite for underperformance.

[h2so4]

Excellent company. They showed stella growth and profits in 2009 and 2010 but looking at my scribble sheet I thought their true profit margin had fallen 50% in 2011. It's one of Monty's favourites so I am sure he will have plenty to say about it.

[Halebop]

The two obvious Sell signals shown here were preceded by an RSI Bearish divergence and followed by many other Sell signals - but these two alone would be enough for a truly devout technician. Note how many times the OBV trendline was confirmed (with surgical precision!) before being broken.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/JBH113.gif

Phaedrus' post of January 2010 was prescient

[h2so4]

Not too confident about the sp. Even at todays price JBH is valued at 2.2b. I just wonder how long other shareholders can hold on? Hope I'm wrong.


My post just 3 hours before P's.

Perhaps a case where TA meets FA?

[buns]

Interesting comments

On same store sales dropping - I've already commented on that. It's not a big long term issue. Have a look at theres compared to Havery Norman, Dick Smith etc.

Profits falling? No hiding from that, however over those FY09 and FY10 years JBH returned 40% on equity, and again in FY11. If one forecasted for them to maintain these returns JB would not be sub $50. Keep in mind they can pretty much bank all of this (excluding investments) as they are pretty much capex free.

Organic profits may drop every now and then, however with time they are going to become safer as JB's model only gets stronger with time.

[drillfix]

Interesting to watch this stock.

What a come back from a high of 13.40 to a low of 12.57 and currently at 12.880 which is a near 93c spread.

No doubt it will close somewhere approx 50% of that spread, imo.

[mark100]

Organic profits may drop every now and then, however with time they are going to become safer as JB's model only gets stronger with time.

buns, to make that sort of comment makes me think you are low on share market experience as it is the kind of thing Roger's followers keep saying. Most Australian based retailers have their stock market day in the sun and then become very mediocre as they saturate the market. I would be very wary of JBH until they can demonstrate this is a temporary blip.

[h2so4]

buns, to make that sort of comment makes me think you are low on share market experience as it is the kind of thing Roger's followers keep saying. Most Australian based retailers have their stock market day in the sun and then become very mediocre as they saturate the market. I would be very wary of JBH until they can demonstrate this is a temporary blip.

Yeah not sure they are capex free either. It must be costing them something to keep all those doors open?

[steve fleming]

buns, to make that sort of comment makes me think you are low on share market experience as it is the kind of thing Roger's followers keep saying.

Even Monty, the long term, bottom drawer, value investor has given up and sold. Pre downgrade, of course, as Roger somehow apparently always manages.

"JB Hi-Fi was 5 per cent of our portfolio however we sold all of our position at $15.50 recently."

http://blog.rogermontgomery.com/not-so-high-at-jb-hi-fi/

[Huang Chung]

I used to like Monty, but for all the talk about A1s and B3s....he seems to operate just like any other schmuk in the market.

[steve fleming]

I used to like Monty, but for all the talk about A1s and B3s....he seems to operate just like any other schmuk in the market.

Monty is worse than the average schmuk in the market.

He preaches (and makes a fortune in book sales and subscriptions) the benefits of identifying, buying and holding extraordinary A1 businesses for the long term.

Yet, in reality, he trades positions based on rumours and market chatter.

This is a classic Monty qoute: "in the short term the market is a popularity contest – prices often diverge significantly from that which is justified by the economic performance of the business. But in the long-term,prices eventually converge with intrinsic values, which themselves follow business performance."

However Monty plays the short term game like any other trader out there.

[Stranger_Danger]

I have no idea who this "Monty" is that you guys are talking about, but his quote is straight from Ben Graham, slightly rephrased.

[drillfix]

SD,

I used to ask myself that very same question. (monty who? and huh?)

But as Steve posted a link just previously here is a biography.

http://blog.rogermontgomery.com/biography/


btw, Monty is short for Montgomery.


To me, he is like a larger version of these Red Heart posters on Hot Crapper.

Meaning, they do know stuff, then find stuff, they dont usually post their info until they are completely set or get in 1st & best dressed so after their posts they are right because people with no knowledge put faith and trust into the posters reputation.

And then,

More often than not, its turns into a game of musical chairs or pass the Hot potato but suddenly the orig poster has already taken profits from whatever initial gains become apparent from posting. The same thing happens with Mr. Popular speaks and posts. It does not mean what they do is wrong, but rather, those who follow this must be either quckly prepared to exit or to not fall a sleep behind the wheel, but most do as they go off to work or something and come back to find the global environment or sector has changed, so by the time they get out (if they choose) its way to late as the early bird finger on the pulse types get out prior to the fall. Of course they get out 1st prior to saying anything hence why the system or method can be flawed for unknowing investors.


Most of the above is already common knowledge anyway I guess.

[Corporate]

Hey guys

I've been doing a bit of research on JBH. As part of this I was looking for comparable operations and as a result perused Harvey Norman's latest annual report.

What really stood out for me was Harvey Norman's trade receivable balances for the year ended 30 June 2011, it is over 1 Billion dollars. In itself this is not all together unusual, but compared to total revenue of only 2.7 Billion dollars my curiosity was raised.

Now sometimes these type of relationships can be easily explained. But in this case I don't have an answer...

A couple of observations:


Firstly, note 5 states that normal credit terms are generally 30 days. However, a simple debtor days calculation suggests 144 days (trade receivables / total revenue *365).


Secondly, trade receivables of $1 billion and inventory of only $330 million.


Thirdly, trade receivables of $1 billion and total interest bearing debt of $650 million.



All of these factors don't stack up in my mind. The only thought I had was that maybe franchise fees sit in trade receivables for 12 months?

[Corporate]

Firstly, note 5 states that normal credit terms are generally 30 days. However, a simple debtor days calculation suggests 144 days (trade receivables / total revenue *365).


The same calculation of JBH gives 7.2 days

[winner69]

HVN operations and aco****s have been a mystery for so many for so long most have given up in trying o understand them ... evn guru analysts have trouble

Your question -- maybe HVN 'buy' stock for the franchise and then 'charge' them --- would inflate recievables cause creditors also look quite high as well. Just a thought

Otherwise no idea

[Corporate]

Interesting point W69. I'm not sure it is the answer though. If HVN was purchasing large amounts of inventory and passing it down to the franchises I would have expected to see some large and unusual looking numbers coming through the cash flow statement...i.e. payments to suppliers and employees being much larger than the total expenditure for the year. However, this isn't the case.

I then had a look at the related party disclosure note which didn't add any further insight into the receivables balance.

If credit terms are in fact 30 days then you would expect trade receivables to be approximately $200-$300m depending on the pattern of sales during the year. Lets call it $250m, not 400% higher at $1b.

You are right about trade and other payables though. They look high. I'm not so worried about them though as the accounting policy states they are generally settled on 60 day terms.

I hope there are some historic revenue recognition issue hidden away in the trade receivables balance.

I could be wrong I don't have any experience in the industry and only spent about 30mins looking at the annual report.

[h2so4]

Nothing normal at Harvey Normal. Promotion periods offer interest free credit up to 36 months.

They also have buy now pay later.

GE their finance company probably doesn't carry the whole can, HVN might carry some, so yes 1b receivables for HVN.

My thoughts

[Corporate]

Nothing normal at Harvey Normal. Promotion periods offer interest free credit up to 36 months.

They also have buy now pay later.

GE their finance company probably doesn't carry the whole can, HVN might carry some, so yes 1b receivables for HVN.

My thoughts

I'm still not convinced..

Look at the ageing of receivables. Almost all of it is sitting in neither past due nor impaired...how can that be when the terms of sales are 30 days and their debtor days are at 144!!

That ageing indicates to me that they had 1 Billion Dollars of sales in May - unlikely!!

It all smells a bit funny

3743

[winner69]

If they were acting as a buying group for the franchisees maybe they only count the margin if any they make on the way through as revenue ... but then again you would expect to see both sides of the transaction reflected in the cash flow ... like that phrase nothing normal at Harvey Normal.

Read a few years ago a guru analyst paper on how he reckoned HVN made thier money ... even he sort of gave up in the end. Tricky things like gerry acting as a de facto advertsing agent so he could screw the franchisees for more by a bit of double dipping and clipping the ticket on the way through

[h2so4]

Total sales from franchises $6.18b

[Huang Chung]

Don't HVN own a lot of the freehold land and buildings their franchisees operate from? So, could it actually include a good amount of rent?

[h2so4]

This may help http://ozbankers.com/index2.php?option=com_content&do_pdf=1&id=29

and this http://www.moneymorning.com.au/20110923/when-your-assets-become-liabilities.html

[Snoopy]

http://www.moneymorning.com.au/20110923/when-your-assets-become-liabilities.html


"And then there’s ‘net receivables’… The total money owed ($1.08 billion) by Harvey Norman customers who are paying off goods on the 24-months interest-free plan. But it’s nothing but a promise to pay. What happens if they die? Or default on their debts? Or Harvey Norman goes bankrupt before those debts are paid? Well, then ‘net receivables’ become a liability too."

Don't follow HVN, but do keep a long eye on Smiths City on the NZX, which has a similar business model.

I really think that the above quote from the article is a ridiculous criticisim to make of a company that sells big ticket appliances. IMO the ability to finance customers is one of the key secrets to surviving when you trade in big ticket appliances. Sure it would be nicer if these customers paid cash. But many (most?) consumers don't have big ticket item cash in the petty change jar. If HVN didn't have in house finance available, then sales would drop dramatically because a large subset of customers could not raise the money to buy big ticket items in one hit.

If customers default on their debts generally the goods are repossessed and on sold to recover any balance outstanding.

If HVN goes bankrupt then the receivers continue to recover the money. The outstanding debt is not 'lost'.

SNOOPY

[percy]

Further to SNOOPY'S post Smiths City put the fridge/goods purchased in the wife's name,so if dad should leave home the wife's benefit will cover the repayments.They have very few problems.I too thought the article was ridiculous.

[winner69]

Prob this guy has it right


Sliding towards electronic retail irrelevance

This is an article aimed squarely at my hedge fund manager readers who regularly ask me what to short in Australia. The most obvious target (in my view) is retailers – and as a taster I start with the big-box consumer electronics retailers.

Australia still has two electronics chains doing big-box consumer electronics. These are JB Hi-Fi which is well-run, has a modern format, a short history and not much balance sheet and Harvey Norman which is a little more old-fashioned (like Circuit City in the 1990s it still sells fridges on prime real estate) but has a better balance sheet (reflecting its once glorious history). Harvey Norman also has a franchise model – it does not own all of its stores.


In the US, the debate is whether the country can support one or zero highly profitable big box chains. Best Buy – the bears argue – is the showroom for Amazon. In Australia, as I said, we still have two chains – it’s as if Circuit City were still around. Moreover because Harvey Norman has a balance sheet it can survive quite a long time and Gerry Harvey is prone to say it is the competitor that will go out of business. But Harvey Norman really is losing share to JB Hi-Fi and ultimately both will lose share to the internet.

Gerry Harvey sounds somewhat desperate these days – firstly arguing that internet shopping is a con (nobody makes any money in it) and then arguing that there should be additional taxes on it. Then he sets up an internet company in Ireland. It looks really bad except that because of the above-mentioned balance sheet, he can stay around for a while and he might even be able to liquidate and be left with something valuable at the end. (I still believe liquidating a large retailer is incredibly hard.)

The JB Hi-Fi model

JB Hi-Fi spends a lot of money to look cheap. Have a look at their website – it is almost a parody of old-style discounting pamphlets. The stores have false plywood floors to make them look like a discounting house. They have young staff wearing casual clothes and signs that are carefully printed on a computer so that they look hand-drawn. The shop is deliberately cluttered giving it a feeling of being (very) crowded. They don't do products that are not hip. There are no fridges, blenders, toasters, but lots of pads, laptops, large screen TVs and computer games. The Apple products are given prime placement, not because selling them is profitable but because it makes the store look cool.

And for a long time JB Hi-Fi really was cheap. The website flashes the slogan "cheapest prices – always". This was a company with the virtuous cycle of looking cheap and being cheap, selling fast, having high turnover and low inventory costs (important in electronics where obsolescence is quick) and just looking like a happening place. It was also a hot stock.

But it does not ring true anymore. They are not the ‘cheapest prices always’ – far from it. They match prices on large items where people price check and they will match prices if you really push them (trade practices law in Australia makes it hard to advertise the cheapest price if you don't have it), but I am noticing that on ‘convenience items’ such as cables and SD cards they are pricing aggressively high. They spend money to look cheap but they aren't any more. It is the advertising tag-line of a decaying business.

They missed earnings expectations a while ago – the stock is having a rough time. But it is still fairly richly valued (do comparisons of price to sales if you want). The immediate question is how far further will it go and will Gerry Harvey keep throwing his good balance sheet at staying in the game and give them pricing pressure. Gerry Harvey, it seems, wants to be the survivor.

My Christmas Observation

I purchased a camcorder at Christmas and forgot to buy an SD card. These produce a lot of data so a big (ie 32gb) card was required.

The only such card at the JB Hi-Fi in the major shopping mall in Bondi Junction was priced at $299 for the 45 mb/s version. The same product via an Amazon partner store cost $128.

Gerry Harvey doesn't do better. A 32 gb a Sandisk "ultra" card at the Harvey Norman in the same shopping centre was priced at $190. Amazon will sell you an identical product for $39.

I am trying to work out the dynamics of this with regard to the stock. My best model is the decline of Radio Shack which did this before them. Radio Shack had a business model built on squeezing very fat margins out of customers that needed something now. They had 2400 stores over America so they were close enough to anyone who needed them pronto.

And proximity was useful. Remember the days you absolutely needed that Firewire cable and were prepared to drive to the local Radio Shack (or Dick Smith in Australia) and pay $10-20 for something that would cost 50 cents to purchase in China? As The Onion has observed we do not need so many cables any more and Radio Shack has become irrelevant. These days it survives by selling mobile phone contracts.

Well as my little SD card survey demonstrates the big-box electronics stores here have become Radioshack – albeit with a bigger footprint and the pretence of "lowest prices". But Radioshack didn't blow up, it just sort of drifted away. The stock was $70 in 2000 – the peak year in which everyone was connecting their computers to the net and needed all those cables. It is $9 now.

That I think is the future here too. The two stores won't deal either one a death blow. Gerry Harvey will continue to lose share to JB Hi-Fi (who look cheaper and cooler) but he and his company are rich and they can bleed for a very long time. JB Hi-Fi will continue to charge "convenience prices" to the customers hiding behind their faux-cheap facade.

And we will wake up in a decade and realise these companies are just not important – or for that matter even relevant.

John Hempton is chief investment officer of Bronte Capital Management, and blogs at Bronte Capital. Reproduced with permission.

http://www.businessspectator.com.au/bs.nsf/Article/Harvey-Norman-JB-Hi-Fi-retail-electronics-online-s-pd20120102-Q4UFW?OpenDocument&src=sph

[mark100]

Great article which I tend to agree with. Almost all of my purchases are online now, electronics, sporting equipment, car parts etc and all so much cheaper!

[percy]

Very good article.Distribution industry is fast changing.In NZ greeting card warehouses were in ChCh,wellington and Auckland.Now all supplied from Melbourne.With couriers and internet prime mall sites are under attack.Prices can be compared and purchases made from home. A book can be ordered from bookdepository UK and delivered before the local bookstore can find out if it is in stock in local distributor's warehouse.And best of all the price will be approx half the local retail price.As KWpoints out there will be big fall outs.Once you have brought a carpart,book or what ever online, you tend to try that supplier first when you want to purchase again.

[drillfix]

the HVN balance sheet will be interesting. How much of HVN is a retail property trust, and how much is it a retailer?


Good ole' Gerry Harvey is a dinosaur whom has failed to evolve whilst the digital transition was in play so therefore he will eventually get smashed (IMO).

From listening to him talk, he seems to blame everything else but himself, which is Huge Mistake #1.

Blaming online stores with modern ways is no answer to his and the HVN problem.

All we need to do is look what is happening,

Meaning, China actually has the keys to many of the doors here. The Chinese Gov subsidizes zillions of these working small enterprises with Free Postage, hence they can sell you a 100 USB devices a extreme minute price whilst offering free postage.

They do this so only they can control their currency and thus Exports etc etc.

Good points also on this thread about the article and viewing the markup's of prices of online vs store.

Of course the online Virtual Reality will become an extremely popular option as there is no huge Rental Costs, Customer service is minimised and primarily it is an Automated Process whereby most of your customers already understand exactly what it is they are shopping for and dont need a pretty smile to sell it to them to make them feel good as Price becomes King.

Ahh well, as always with these facts and issues time will tell and only the adaptable survive or triumph.

[soulman]

One of the more intriguing wars going on between online and shopfront has been young internet entrepreneur Kogan Vs both CEO Smart (from JB, which stands for John Barbuto) and Harvey from Harvey Norman.

Another whiz kid Leibovich is starting out online grocery to compete with the big 3. Not sure whether that would work.

Like you Mark, I bought everything online except for food. Just bought 2 brand new office leather chair online. Not sure whether they are cheaper in Officeworks but I save petrol and time. Shoes, tracksuit pant, shirts are some of my recent purchase as well. All received brand new and very quick. From UK, US, Korea and Aust.

DVD are the cheapest in UK.

I am studying more about shorts because I think JB are still worth shorting. Anyone here shorts and who are the provider/broker?

[Corporate]

Soul, i'm interested in shorting to. if anyone can help id appreciate it as well. wouldn't short I've though

[soulman]

Good day Corporate. With the demise of MF Global, I am looking at shorting without CFD. Shorting without the risk of the provider going broke due to ponzi/scam...etc...etc...Another example of online poker demise and the ever popular Madoff evil scheme.

Anyone out there shorts with actual borrowing of stocks from a reputable provider.

[drillfix]

Souly, Corporate, Here are a couple of ways or bits of information.

You can short via your retail broker as in Commsec, NAB, Westpac or eTrade etc etc.

However you must do a little quiz test they give you. (at least for commsec) and also its not all open to everybody when you want to short.

As in, not every stock is short'able & some stocks only have so much stock available for shorting but this may vary from broker to broker.

I also use interactive brokers which I can also take short positions but again it is not on every stock, as like retail stock brokers there is a list of Securities of available shorts with still ony XYZ amount of stock available which usually can be shown on the previous days short sell list.

Here is such a list: >> http://www.asx.com.au/data/shortsell.txt


Not sure exactly if IB uses a time limited hold on shorts or cover on EOD.

Back to JBH, the daily appears to be turning as does the 60 min chart to take caution in shorting JBH in the near future anyway.



add/edit:

PS, I also forgot to mention regarding my other post about the online stores, as in primarily they are for smalls and electronic and technological goods.

There is a shop front clear cut benefit from Furniture and many large white goods as many times people need the benefit of testing Chairs, Sofa's, Kitchen Table and chairs, Beds and whatever else house furnishing type things.

So perhaps that just scales HVN back to its furniture, rather than computers and what not.

[Stranger_Danger]

Getting a little bit away from analysing the listed retailers per se, I know a number of people who now buy virtually all their food from the local (predominantly under the table, I suspect) weekend food market, avoiding supermarkets etc.

They buy the bulk of their consumer goods online.

And, in most cases, not that they've even thought about this and I'm not going to tell them, all or most of their revenue comes from the NZ Government. Most work in jobs like teaching, nursing, central Govt administration etc.

Amongst the poorer ones, virtually none are net taxpayers due to Working For Families.

What clever people!

They cleverly snapped up the "safe until the end of time" Government jobs on the income side, but, on the expense side, whilst probably supporting workplace regulation and high company taxes and compliance cost with their voting intentions, notice how the "invisible hand" has pushed them away from buying from anyone who is actually COMPLYING with this regime?

I'm not making any comment on rights and wrongs. I'm merely saying that the plan is definitely rational if Government funds are derived from a magic beanstalk of some kind, and the high paying Government jobs and transfer payments will continue even after local businesses, jobs for young people and collection of GST and company tax has been murdered.

Assuming magic beanstalk, no problems. Otherwise? A sting in the tail down the track, perhaps. One impacting a lot more people than just Gerry Harvey.

P.S KW's comments hint that the issues are similar - if not worse? - in Australia, which is what I have heard anecdotally too.

[Jay]

Just one question, will "we" also move to buying Fridges, washing machines , driers beds and the like online as well, if not who will be selling these if the Big box retailers cease to exist? Or should thr question be how long before we mainly buy this stuff online, though hard to test drive a bed online!
Cannot see any reason why not, as it not if they put it in a bag and you take it home as present

[drillfix]

Good question Jay,

But really, no doubt people themselves will forge the way either both online, or offline.

At the end of the day, certain things you just need to see and touch to know, and this is where the "Online illusion" will not be good enough or just wont cut it, as eventually people will learn from their mistakes of buy such things online or get burnt by this when they cant return a bed as easy or what ever other reasons that could be numerous.

Last, this does not mean you cant buy a bed or fridge online either used or new and be happy with it. I am sure it does happen for some or even many but certain beds, fridges or items with a High ticket price may want or needed to be closer inspected.

I have bought a pairs of shoes online, and it seems 50% of the time, the shoe is just not as comfortable than I imagined it to be, and the other time, the size was mixed up from being US and UK size so I could not send them back as postage would have been too expensive to not keep them.

That is another example of the problems, and sometimes, same with clothes, too tight, too loose, too dark, too light, not enough stretch or whatever million reasons that can be given.

So there are a couple of other examples whereby either folk get burnt (Eventually) and then it becomes apparent that over time, the previous bargains now have to add certain Losses to the previous bargains which then subtracts, which are factual even though many people dont seem to count this in, which can be a costly mistake.

[Jay]

Agree df, will have to pay a premium of some description, whether it just be time & petrol, so you save in the long run, books, CD's dvd's etc you know what you are getting.
Returning items can be costly, negating the savings!

[drillfix]

I'm contemplating buying a Miele washing machine since it was Steve Jobs pick, and he spent months researching them :-)


Each to their own KW, but iJobs reviewing one would have the opposite effect on me, I would probably never buy one of those knowing that...LOL

With regards to Fridges and other white goods, yes if the warranty, delivery and incentive then sure~!

[drillfix]

Have you read his biography? If so, you would know he was a total anal retentive perfectionist. He only ever bought the best things available, consequently his house was unfurnished except for a single table and lamp, and a couple of stools. He couldnt even bring himself to buy a couch. So to have decided on a washing machine brand was huge! I think we should all go buy shares in Miele, its the best brand marketing that company could possibly have got ;-)


Ahh well KW, each to their own I guess and as you can see, I am not real to big on Steve Jobs.

Does his bio mention anything of the fact that he completely dismissed his girl friend for having his child and completely denied the child being his and even with all his money, not even helping them out ....Hhaaa~! what a Job that guy is LOL

[POSSUM THE CAT]

KW if you are buying MIELE which one are you buying the Italian one or the Chinese one you need to check the country of Origin on the manufacturers tag on the machine. A Harvey Norman sales person showed me that one about eight years ago. Many shops tried to sell supposedly high quality Italian made appliances until I showed them the made in CHINA tag

[fungus pudding]

KW if you are buying MIELE which one are you buying the Italian one or the Chinese one you need to check the country of Origin on the manufacturers tag on the machine. A Harvey Norman sales person showed me that one about eight years ago. Many shops tried to sell supposedly high quality Italian made appliances until I showed them the made in CHINA tag

There's every chance the Chinese one would be at least as good as anything made in Italy. :t_up:

[POSSUM THE CAT]

KW My apologies I was relying on memory over seven years ago. I now check the country of origin on ever home appliance I buy & find that either the sales people do not check or they are telling lies. Also as for Miele they have come a long way from when they were making cheap Mopeds

[drillfix]

http://www.brisbanetimes.com.au/business/intelligent-investor/why-the-worst-is-yet-to-come-for-jb-hifi-20120124-1qf2d.html
JBH headed for shareholder destruction?

PS. My sister bought a Miele vacuum cleaner, and she loves it. Apparently they outperform even the Dyson!

That article really paints out what and how a typical Snake CEO behaves or gets, doesn't it~!

[POSSUM THE CAT]

Drillfix nothing surprising in that as Dyson one of the worst on market all gimmicks no substance

[POSSUM THE CAT]

KW try it against a Nilfisk extreme & you will be astonished. Even an entry level Vax would leave it for dead how often will it not work because of its silly filters used a lot of vacuum cleaners with a cleaning business.

[winner69]

Great result and JB still making heaps of money

and those nasty horrible short sellers take a bit of a beating .... love it
http://www.theage.com.au/business/jb-hifi-surge-shocks-funds-20130212-2eb2b.html

[winner69]

Love those simple medium/long term trends

In spite of retail stuffed in OZ and the likes of JBH being 'irrevelant' as per one of the earlier posts JBH done well the last few years. Shareprice almost doubled

Probably done better than the market but if you have a fair idea how a company works the ride is more enjoyable.

Mr P would be proud of me ... sort of anyway as I did have a bit of a dabble on the way down before I saw the light and day ... all I needed was a bit of patience and wait for the up trend to start

Time to keep a real close eye on the charts methinks .... 20 bucks getting a bit rich

[winner69]

Great full year from Jbh

2nd half sales growth better than 1st half ....that's good
Profit at 116m up 11% ...that's very good
Even made some money in nz eve though sales down on last year
Online sales up 29%. To 66mill but still only 2% of sales
Lots of digital downloads and ebooks downloaded ...staying relevant
Strong cash flows ...cash in bank over 60 mill even after a decent dividend and investment
Divie up 10% ....yippee
Number of stores to keep on increasing

Al bloody good I reckon

So good the shareprice probably go down

[winner69]

Market seems to like the forecast sales growth

Share price 20 bucks soon ...just maybe

[winner69]

Hey winner .....getting close to that 20 bucks

Only one good day away

But keep on eye on that chart on your ATR stop loss

[winner69]

Hey winner ..... just a few cents off 20 bucks now

You must be getting excited just remember that 23 bucks is the all time high

Abbott winning seems to have raised the level of consumer confidence .... good figures out today ..... happy consumers and into the nearest JB store to see what one can buy

[percy]

Onwards and upwards then?!

[winner69]

Onwards and upwards then?!

as with a lot of retailers eh

Might start looking at some of the big miners again as well

[percy]

as with a lot of retailers eh

Might start looking at some of the big miners again as well

Yeah Right !!!
You may have to go ahead without me.!!!
lol.
ps.How did the trees stand up to the big wind?

[winner69]

Percy ok cause the bigger ones shelter him a bit. Snoopy south facing but the gully goes east west so that not help him in a nor westerly gale but he should be OK but I check on him tomorrow

Both appreciate the bit of rain I think

[percy]

You may have to put a stake in to prop him up.!!!

[winner69]

great .... a 20 buck close.

this time last year it was less than 9 bucks

hey winner ..... price doubled in last year

That's good eh

[percy]

No doubt about it,winner by name,winner by nature.great performance winner.!
I think those wonderful people at www.estaronline.com do JBH's wed site,so no wonder JBH is a winner for you winner.

[winner69]

estar certainly do the jbh stuff percy

looking through the list of their clients there does seem a high proportion of the better performing retailers amongst them .... must be a story behind that

(I see Postie Plus not one of their clients ..... couldn't resist that)

[percy]

estar certainly do the jbh stuff percy

looking through the list of their clients there does seem a high proportion of the better performing retailers amongst them .... must be a story behind that

(I see Postie Plus not one of their clients ..... couldn't resist that)

Postie decided to use someone another firm.
No surprises Postie's picked the wrong firm.!
Winners stick together.!!
I can never understand the Postie story.Walked away from their mail order business to concentrate on retail,then were very late going for on line.Would have thought going to online from mail order would have been the logical way.But they are not winners.

[winner69]

great .... a 20 buck close.

this time last year it was less than 9 bucks

hey winner ..... price doubled in last year

That's good eh

0MG winner .... its still going up up and up ... a close at 2150 today

Maybe 2200 next week and then head to an all time high and the maybe 25 bucks by xmas

Retail a good segment .... esp those who do the basics well

But watch those charts winner .... remember what Mr P said .... JBH is one of those (almost) perfect stocks trading the medium to long term trends

[winner69]

quoting yourself or forgot to sign into the other account there winner? ;)

There is only one of me moosie

It's lonely on threads where I the only one telling a good story so I talk to myself.

I know that nobody listens to me but I find that boring old things like JBH and DLX are quite fun when they more than double in price over a year or so.

This has really been my thread for a few years now ....did get a lot of debate a few years ago when most said that JBH was dead in the water because the world had changed and nobody would go to their shops anymore and they would go out of existence ..but never mind the fundamentals of the market - if they keep on selling more and more stuff and the chart looks ok why not put your money in for the ride. That ride might end soon, if the chart says so, but what the heck it's been fun

And welcome to the thread moosie, nice to have you on board

[winner69]

Don't worry winner, I listen to ya, no matter how ranty or ravy it may be!

I think Peter Lynch described it best when he said "I look for the most boring stocks to buy. The more boring the name/sector/management the better!" Obviously you have picked a turnaround here that is going to keep ramping up the sales over the years. It may not make you instantly rich like some of the hot sectors out there, but it will make you rich nonetheless once the baggers start accumulating!

Not in a turnaround in company performance .... its always made heaps as the chart shows

Yes a turnaround in market sentiment .... big time .... like 140% in the last year .... wonder if some in the hot sectors can do that ..... even DIL would be struggling to get to 14 bucks in 12 months time (+140% from today) I would say.

Pick a company you know something about and trade the medium to long term trends ... as Mr P said JBH was a perfect example of this.

Not so boring all this in my opinion.

Some similarities to DIL in that one of the drivers of the price falling from 20 bucks to less than 10 in the first place was US hedge funds shorting the hell out of it ..... apparently still one of the most shorted stocks on the ASX bur sure has some followers

[winner69]

ASM today ..... Q1sales up 8%, so still on track to have another great year

Methinks we'll see an all time high for JBH in the near future

[percy]

ASM today ..... Q1sales up 8%, so still on track to have another great year

Methinks we'll see an all time high for JBH in the near future

Well all I can say is;that's incredible.

[Toulouse - Luzern]

Hi

Just a note to say thanks to the recent contributors on this thread.

I decided to join the party just before the close last night and happy after the first hour of trade today.

Hope the punch bowl will be there over Xmas and beyond

[winner69]

Hi

Just a note to say thanks to the recent contributors on this thread.

I decided to join the party just before the close last night and happy after the first hour of trade today.

Hope the punch bowl will be there over Xmas and beyond

JBH was under 10 bucks this day last year ...good eh

But was 23 bucks a couple of years before that

So be careful .....follow those charts .......even though JBH will continue to make zillions it's share price is subject to market sentiment.

Could be 10 bucks again after the next market downturn ....hope so so I can make heaps again.

JBH is a almost a trend followers perfect stock ......just follow the major trend lines

[winner69]

JBH 15% off its recent high. Not good

Things don't look that bright a the moment. Maybe JBH sufferings bit .....or is it just current market sentiment putting pressure on the high flyers

[Toulouse - Luzern]

Hi Winner69,

Thanks for your postings and analysis and interest.

I should have kept you advised.

I respected your advice of 31 Oct 2013 to watch the charts which I did.

Bottom line is that I was in JBH on 30 October 2013 and out on 5 November 2013 as it did not look from the charts like JBH was the "safe" long term hold that I initially looked for.

So I exited my JBH position. I note since the high on 8 November 2013 of $22.68 it has been down hill.

I agree with you that current market sentiment may be putting pressure on the high flyers.

My take is that after the 4 week chart declines shown in the DomPost NZX, ASX indexes, the US situation may be leading to some discomfort with US investors and then others including Australia and NZ investors, with a follow on effect.

It seems to me that large institutional investors (and others) have many longer term holdings that are profitable, say in the ASX banks, or NZX XRO.

With a favourable USDNZD exchange rate for the year enhancing their profits, some may have decided to withdraw some $ from the riskier off shore investments to provide liquidity, given the ObamaCare noise, US taper, and debt ceiling issues coming round again. Once a negative movement starts it is self reinforcing.

While one swallow doesn't make a summer, on a positive note I notice that the Dow is up 198 today, with news that US unemployment is .5 above the perceived taper trigger point.

[winner69]

Kirstie thinks FBH the star of 2013 ..... and 2014 to be pretty good as well

I agree Kirstie

http://www.businessspectator.com.au/article/2013/12/20/markets/year-charts

[winner69]

JBH third best performing stock on the ASX200 last year ....well done JBH

http://www.theage.com.au/business/markets-live/the-asxs-winners-and-losers-for-2013-20131231-304c1.html

Retail stocks and consumer discretionary best sector to be in.

Kathmandu ranked 5th - great for them

When sectors a down and out that is the time to start investing in the best companies in these sectors. Those who thought retailers were stuffed and down for the count have missed some great opportunities

Resources could be the next big revival for 2014 - FMG and BHP up more than 20% since jly

[winner69]

Hey winner, at this rate JBH will be hitting an all time high pretty soon

Well over 20 bucks now. Pretty good for one of the most shorted stocks on the ASX

Budget will boost sales. All those SMEs upgrading their computers with h government help. Can't lose can they.

Reckon it will push 25 and beyond?

[winner69]

Well the market liked the full result

Up 10% so far today

That $25 on the cards still

Great retailer

[noodles]

Well the market liked the full result

Up 10% so far today

That $25 on the cards still

Great retailer

I remember it was trading at less than $10 last time I looked at it. I got a bit spooked because it was one of the most shorted stocks on the exchange. The shorter's would have taken a bit of a bath!

[winner69]

I remember it was trading at less than $10 last time I looked at it. I got a bit spooked because it was one of the most shorted stocks on the exchange. The shorter's would have taken a bit of a bath!

Even $15 late last year was a good buy level

Interesting chart - distinct medium/long term trend lines

Profits haven't driven the ups and downs - market sentiment has

[noodles]

Even $15 late last year was a good buy level

Interesting chart - distinct medium/long term trend lines

Profits haven't driven the ups and downs - market sentiment has
Just goes to show that some retailers can work their way through a massive devaluation of their currency.

Pity JB Hifi doesn't have the latest models. In fact, it is the case with most retailers in NZ, you mostly get stock that manufacturers want to get rid of.

[winner69]

Noodles, Didn't make much in NZ though

Just over a million on $200m sales

[winner69]

One less competitor

Shares up 5% on the news

[winner69]

JBH close to $30 - wow

In spite of the experts saying JB Hi Fi is a broken model and bound for eventual demise they just keep on delivering. Might acquire Good Guys but acquisition is not a necessity for growth, doingwell with out. But Good Guys will make them bigger - even more profit

Sold out at $23 odd but where the cash went has done better