Shares in electronics retail giant JB Hi-Fi have tumbled after it warned of slowing sales momentum as the global artificial intelligence boom squeezes consumer tech supply chains and forces up wholesale prices.
In its full-year results, the company posted record sales of $11.1 billion, driving a 6 per cent gain in net profit to $489.9 million. However, the positive headline figures mask a highly challenging finish to the fiscal year.
JB Hi-Fi noted that sales momentum began to noticeably decelerate in the fourth quarter, a slowdown directly attributed to what the company described as βsupplier price rises and stock availability shortages in the technology categoriesβ.
Investors reacted swiftly to the second-half earnings slump and cautious trading outlook, sending JB Hi-Fi shares tumbling by 11.9 per cent in Monday morning trade.
βTrading in the first half of the year was very strong with record sales and strong earnings. The second half of the year saw the onset of challenging macroeconomic and market conditions,β the company said in its annual report.
βWhile the Group recorded sales growth year-on-year from continued market share gains and strong retail execution, earnings in the second half were down on the prior year.β
Over the past 18 months, major semiconductor manufacturers and global foundries have aggressively pivoted production capacities toward enterprise AI servers and data centres, which has had extreme knock-on effects. With makers of consumer technology starved of essential components, the global supply of laptops, tablets, smartphones, game consoles and smart home devices has fallen short of traditional levels, inevitably pushing up wholesale prices.
In an investor call, JB Hi-Fi chief executive Nick Wells confirmed that categories including laptops, PCs, smartphones and gaming hardware had been significantly affected by component shortages, with some brands lifting prices by as much as 50 per cent. In addition, manufacturers had supply challenges and were not supporting promotional activity at the length and depth they may have done previously.
The company said consumers are increasingly looking for discounts and shifting discretionary spending to major promotional events, such as Black Friday, Boxing Day, and end-of-financial-year sales. This has forced the company to aggressively slash prices at the register to maintain its sales volumes. Consequently, the retailer took a hit to its profitability, with gross margins falling 25 basis points in the second half to 21.93 per cent.
MST Marquee analyst Craig Woolford said JB Hi-Fi faced a slower sales backdrop in the current financial year, with the slowdown likely to accelerate in the December 2026 quarter. But the company is certainly not alone in navigating the turbulent macroeconomic situation, with the entire electronics retail sector to face questions on when or if supply can return to normal levels.
Supply chain constraints driven by the global AI build-out are widely expected to persist for at least another 12 to 18 months, as silicon foundries remain booked out by AI giants. Even tech giants like Apple are feeling the pinch, with rumours that only certain iPhone 18 models will be available this year, the rest pushed to 2027.
As part of its retail execution strategy, JB Hi-Fi will attempt to defend against the worsening conditions by leaning into promotions and key sales events, and by facilitating consumers βtrading downβ to new devices that may not be top-of-the-line but now cost what would have previously been premium prices.
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Tim Biggs is a writer covering consumer technology, gadgets and video games.Connect via X or email.