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Speaker 1: Welcome to Fear and Greed, summer investing series brought to

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Speaker 1: you by VANTA specialists in compliance lead Growth. I'm Sean Aylmer.

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Speaker 1: JB hi Fi is a household name in Australia, but

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Speaker 1: it's also a contender for the best run retailer in

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Speaker 1: the country, having had just two ceas in about fifteen years,

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Speaker 1: and that success has been reflected in its share price.

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Speaker 1: As always, this is general information only and you should

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Speaker 1: seek independent advice before making investment decisions. Ben Gilbert is

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Speaker 1: head of Australian research at Jarden. Ben, welcome back to

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Speaker 1: Fear and Greed.

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Speaker 2: Thanks Sean. Thanks having me.

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Speaker 1: Just keeps giving JB high fight. It's share price up

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Speaker 1: seventy eighty percent over the past twelve months. Why is

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Speaker 1: it about that company that makes it so good?

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Speaker 2: It is defying gravity and it continues to push and

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Speaker 2: I think from somehow some of the performance we saw

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Speaker 2: through the end of last year, from a training standpoint

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Speaker 2: with cyber and some of the general spinning back drops,

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Speaker 2: it's all very supportive. I think a pretty strong outlook

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Speaker 2: to come. Look. I think what we're seeing with JB's

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Speaker 2: to your point in the opening, is it is arguably

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Speaker 2: the best or one of the best run electronics retailers growibly.

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Speaker 2: It's productivity in terms of sales per square meter when

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Speaker 2: you walk into the store is as high as anyone's,

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Speaker 2: its costs as a percentage of sales or as low

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Speaker 2: as anyone's, and it continues to innovate and find the

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Speaker 2: next big thing. And what that's done is a placed

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Speaker 2: in great stead to continue to winning share and continue

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Speaker 2: to grow top line and continue to surprise all of

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Speaker 2: us analysts out there, and many of which, including myself,

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Speaker 2: have been wrong about its performance over the last twelve

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Speaker 2: eighteen months.

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Speaker 1: So how much is it about management and how much

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Speaker 1: is it about brand? And JB high Fire is extremely

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Speaker 1: strong in both those areas well.

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Speaker 2: Look, I think I think it's both of those things.

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Speaker 2: I think ultimately, if we look at a lot of

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Speaker 2: these companies that have done well in Australia over the

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Speaker 2: last twelve eighteen twenty four months, even the last ten

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Speaker 2: fifteen years, is a lot of them just keep it simple.

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Speaker 2: They stick to their knitting, they stick to what they're

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Speaker 2: good at, and they really focus on the customer and

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Speaker 2: where the customer is moving next and trying to get

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Speaker 2: there with them and capture a greater share of wallet

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Speaker 2: and to JB's credited, over the last fifteen to twenty

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Speaker 2: years since it's been listed, it's continued to work and

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Speaker 2: engage with its customers, work out the next big thing

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Speaker 2: and really sort of play in that space in a

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Speaker 2: big way. They moved out a sort of CDs, DVDs

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Speaker 2: and high fi, and they moved them into big into TVs,

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Speaker 2: and they went into computing. Now telco has been the

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Speaker 2: big category of the last few years, and it's now

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Speaker 2: the biggest category within a JB High five. So long

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Speaker 2: going to answer your question, Sean, But I think it's

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Speaker 2: a bit of all of those things. And the question

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Speaker 2: is looking forward is what's the next big thing for

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Speaker 2: JB's and what's going to drive that above market performance

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Speaker 2: and continue to surprise all of us positively and see

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Speaker 2: the share price continue to take a long You.

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Speaker 1: Can't ask that question on answered, Ben, Do you know

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Speaker 1: what it is? I mean, can it sixty seventy percent

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Speaker 1: share price gain in the last twelve months? Can it

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Speaker 1: do it again?

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Speaker 2: Oh? Look, I think the competitive backdrop looking forward is

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Speaker 2: only going to intendify. You've got the likes of Amazon,

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Speaker 2: which continues to expand in this market. They're rolling out

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Speaker 2: a couple of bulky sheds that did one big one

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Speaker 2: at the end of lastey year, that another one coming

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Speaker 2: out this year, So the competitive backdrop is increasing. I

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Speaker 2: think the question for someone like JB's is is, well,

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Speaker 2: what they're doing in their marketplace strategy. They've now got

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Speaker 2: over four and four thousand products. I'm sitting in the marketplace.

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Speaker 2: That increases eyeballs, So all of us are going to

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Speaker 2: be more inclined to go to their site because they've

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Speaker 2: got more range. Now, if they get more eyeballs, what

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Speaker 2: can they do? They can start talking about things like media.

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Speaker 2: You can get advertisements on site, you can start selling

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Speaker 2: more advertisements. Becomes quite significant material profit streams. You look

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Speaker 2: at what all these is doing, You look at Walmart's doing,

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Speaker 2: Look what Amazon's doing. All these global sort of best

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Speaker 2: in class retails. They're big profit opportunities. So I think

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Speaker 2: the question now for JBS might not be so much

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Speaker 2: what's in the store today that we're all seeing, Is

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Speaker 2: that it going to be a telcre or connect at home,

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Speaker 2: all these things. I think it's around how they can

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Speaker 2: leverage brand leverage, the brand trust increased eyeball share through

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Speaker 2: Marketplace and find some of these other adjacencies in terms

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Speaker 2: of revenue opportunities and look, if that can click over

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Speaker 2: the next six to twelve months, it could be material.

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Speaker 2: We've talked about it before. Companies like Walmart have done

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Speaker 2: a phenomenal People like best Buy in the US are

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Speaker 2: doing it as well, its economy, finac et cetera through Europe.

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Speaker 2: So that, in my mind is probably the place that

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Speaker 2: we need to watch for JBS for this current year.

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Speaker 1: It's interesting these retailers, they're much more than just your

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Speaker 1: traditional retailers now, at least in terms of revenue streams.

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Speaker 1: They're finding ways to get money because they have an audience.

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Speaker 2: They are and I think what we're finding is is

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Speaker 2: that the lines are being blurred across many sort of

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Speaker 2: channels and mediums out there at the moment. Whether it's

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Speaker 2: where you do your weekly supermarket shop, whether it's the

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Speaker 2: extent to which you trust a brand like JBS to

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Speaker 2: then say, okay, well I'm prepared to go and not

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Speaker 2: only by a TV, but I might look at some

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Speaker 2: a chess set or something like that on their website.

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Speaker 2: Because you trust a brand and you engage with it

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Speaker 2: you've got the value perception. And I think in this

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Speaker 2: new world of data and this sort of enormous level

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Speaker 2: of data we've got out there, brands can understand where

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Speaker 2: they've got a right to play and where consumers trust

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Speaker 2: them to move to next. And you have increments as

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Speaker 2: sort of the game of inches. If you like, you

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Speaker 2: keep moving into one category, then open up something else.

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Speaker 2: And as we continue to see brand trust build, brands

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Speaker 2: sort of look to move towards these endlesstyles concepts, their

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Speaker 2: ability to win a greatest share of wallet increases, and

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Speaker 2: their ability to what they can generate moving forward in

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Speaker 2: terms of profit increases. And it obviously gets reflected in

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Speaker 2: share prices as if they're successful.

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Speaker 1: And the risk is it all about? Is it competition near?

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Speaker 1: Is they're going into? Yeah?

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Speaker 2: Look, I think the thing with JB's is it's just

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Speaker 2: such a phenomenal retailer. It's been extremely well run, very

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Speaker 2: high quality. The whole sort of concept of sort of

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Speaker 2: maintaining yourself or maintaining that level of greatness, And can

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Speaker 2: they get better? Where do they get better? Where do

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Speaker 2: they surprise? And that's the challenge that I sort of

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Speaker 2: face when I look at it at the moment in

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Speaker 2: terms of thinking, well, to your question, can it double again?

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Speaker 2: We'll look, who knows, We'll wait and see, but it's

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Speaker 2: what next. And you do have a competitive backdrop that

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Speaker 2: is intensifying now. To their credit, they've done a phenomenal

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Speaker 2: job sort of batting that back over last twelve, eighteen,

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Speaker 2: twenty four plus months from that standpoint. But yeah, I

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Speaker 2: think that's sort of the million dollar question moving forward.

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Speaker 1: Ben, thanks for joining Fear and Greed summer series.

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Speaker 2: Thank you.

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Speaker 1: That was Ben Gilbert, head of Australian research at jard

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Speaker 1: And remember to get your own independent advice before making

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Speaker 1: investment decisions. This is Fear and Greed's Summer investing series,

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Speaker 1: off at Vanta dot com slash Fear and Greed. I'm

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Speaker 1: Sean Elmer, enjoying your day