JB Hi-Fi loads up home appliance foothold through $47.8m deal for Victorian retailer E&S

The consumer goods retailer, which also owns The Good Guys chain, has announced the acquisition in tandem with a 16.4 per cent fall in net profit for the full year to $438.8 million as group sales edged 0.4 per cent lower to $9.59 billion.

E&S Trading, which trades under the e&s brand, operates 10 showrooms in Victoria selling kitchen, bathroom and laundry appliances.

The company, which also has a strong online retail presence, opens a new showroom in the ACT this month as part of national expansion planjs that are set to accelerate under JB Hi-Fi’s ownership.

JB Hi-Fi says the business is “highly complementary” to the group’s existing brands while expanding its customer segments and product categories to include premium home appliances and bathroom products. It also adds large commercial construction customers, boutique builders and architects to its business.

“E&S is a high-quality business that prides itself on offering the world’s leading kitchen, laundry and bathroom brands at great prices, with expert advice and exceptional customer service,” says JB Hi-Fi CEO Terry Smart.

“E&S have a highly complementary premium product offering, which will appeal to a new customer base, and a commercial construction market focus, making it a strategically compelling addition to the group.”

Under the agreement, JB Hi-Fi will take a 75 per cent stake in E&S Trading Co, a company that was established in 1962 by Bob Sinclair and his two brothers.

The cash deal has been struck on a cash-free and debt-free basis, with JB Hi-Fi retaining a put-and-call option to acquire the remaining 25 per cent of the business in September 2029.

E&S managing director Rob Sinclair, the son of co-founder Bob Sinclair, says the acquisition by JB Hi-Fi delivers an opportunity for “strong future growth at the premium end of the sector”.

“This partnership will allow us to expand our reach and continue delivering exceptional service and top-notch products to our valued customers," says Sinclair, who will continue to lead the business following the acquisition.

Sinclair says E&S will retain both its brand and “unique operating model”, while operations at existing stores will remain unchanged under the new ownership.

"It will be business as usual at all existing stores,” he says.

“I will remain managing director, continuing to employ our successful growth strategy on a broader scale.

"JB Hi-Fi's deep understanding of the homemaker sector and extensive experience in the appliance industry make it an ideal partner for our business.”

The acquisition will be funded through existing cash reserves with settlement expected to occur in in September this year.

The acquisition has been announced alongside a mixed FY24 earnings result for JB Hi-Fi, which CEO Terry Smarty says remained solid despite the challenges.

Group revenue was impacted by a 4.8 per cent fall in sales from The Good Guys to $2.68 billion, with the result affected by lower margins amid an increase in on-floor discounting.

The JB Hi-Fi division in Australia lifted sales by 1 per cent to $6.61 billion, led by demand for technology and consumer electronics products. The key growth categories were mobile phones, small appliances, cameras, games hardware and services.

Online sales for the division rose 2.8 per cent to $1.03 billion, representing about 15.5 per cent of total sales.

JB Hi-Fi’s New Zealand sales lifted 12.3 per cent to NZ$327.9 million, with comparable sales up 1.6 per cent.

Gross profit for the division surged 18.8 per cent to NZ$55.5 million, thanks to higher margins, although EBIT was still in the red with a negative NZ$2.3 million, down NZ$6.7 million from a year earlier.

FY25 has kicked off strongly for JB Hi-Fi which recorded total sales growth of 5.6 per cent in Australia for JB HI-FI Australia in July, while The Good Guys has delivered 2.7 per cent sales growth compared to the same time last year.

JB HI-FI New Zealand sales are up 12.2 per cent for July thanks to new store openings, although comparable sales growth is down 4.9 per cent.

“It is pleasing to see sales momentum in Australia continue into July,” says Smart, adding that the month’s results are in line with expectations.

“We remain committed to offering the best value and exceptional customer service to maximise our brands sales opportunities.”

JB Hi-Fi is paying a final dividend of $1.03 per share, fully franked, down 12c per share from a year earlier.

However, due to the group’s strong financial performance and cashflow generation, leading to an “elevated net cash position and a significant franking credit balance”, JB Hi-Fi has declared a special dividend of 80c per share fully franked.