Is JB Hi-Fi (ASX: JBH) the best ASX retail share to buy today? It just gave its sales update for the third quarter of FY20.
What is JB Hi-Fi?
JB Hi-Fi is one of Australia’s largest device and home appliance retailers with its network of The Good Guys and JB Hi-Fi stores. JB Hi-Fi was established in 1974 by Mr. John Barbuto (JB), trading from a single store in East Keilor, Victoria.
JB Hi-Fi’s FY20 Q3 update
The retailer saw an acceleration of sales in late March as customers prepared for a potential increase in government restrictions.
In the third quarter of FY20, JB Hi-Fi Australia saw total sales growth of 11.6% with comparable growth of 11.3%. The Good Guys saw 13.9% total sales growth with comparable growth of 13.9%. FY20 to 31 March sales were up 6.9% and 5.4% respectively.
However, JB Hi-Fi New Zealand total sales were down 3.3% due to the closure of all ‘non essential businesses’ which included JB Hi-Fi New Zealand’s stores and online operations. FY20 to 31 March sales were down 0.4%.
Apart from closing a few airport and CBD stores, JB Hi-Fi has been doing well in Australia with high demand for products needed for people to live, work and learn.
JB Hi-Fi balance sheet
To strengthen its liquidity position, the company has received credit approval for an additional $260 million of short term debt facilities. Management don’t expect to need to use this.
Is the JB Hi-Fi share price a buy?
The company has already withdrawn its guidance and still doesn’t want to provide any because of the uncertainty. But JB Hi-Fi was certainly doing quite well by the end of the March 2020 quarter.
If JB Hi-Fi can continue to perform well then it may well be a decent buy today, better than the banks at least. But for the long term it may be best to go for fast-growing technology shares with much higher gross margins like these ones:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
