JB Hi Fi cuts guidance as The Good Guys go bad

JB Hi Fi cuts guidance as The Good Guys go bad

JB Hi Fi (ASX: JBH) has downgraded its profit guidance off the back of a poor quarter for The Good Guys.

The group was impacted by challenging conditions in the home appliance market as sales growth for The Good Guys fell 2.9 per cent (compared to 3Q17).

While JB Hi Fi has reaffirmed its sales guidance to be $6.85 billion, the company has dropped its net profit forecast to $230 million, down from $240-235 million.

The company says unfavourable weather conditions and heightened price competition added to the negative impact on gross margin throughout 2H18.

Despite the looming short-term loss, JB Hi Fi remains optimistic about the group's medium and long-term outlook for both its namesake division and The Good Guys.

The group currently operates 311 stores across Australia and New Zealand, comprised of 104 The Good Guys stores and 207 JB Hi Fi outlets.

JB Hi Fi has evolved its offering over the past 12 months by putting a higher focus on its drones, home security and communications categories.

In the year ahead, it plans to continue its work on communications and put a larger emphasis on PC gaming as well as connected technology and home automation.

To improve The Good Guys' performance, the group says it will pick up its visual merchandising standards as well as its delivery options, while maintaining a continued focus on sales and increasing supplier engagement.

JBH shares fell by as much as 9.3 per cent during early trade to hit $23.19 at the time of writing (10:30am AEST). 

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