JB Hi Fi Culture A Sticking Point For Woolworths Aquisition
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Woolworths and JB Hi Fi management have met to discuss the possibility of the mass supermarket retailer buying JB Hi Fi. ChannelNews has been told that Woolworths has appointed an external investment team to evaluate the possibility of acquiring the consumer electronics retailers who this week is set to report their latest profit results.

Woolworths and JB Hi Fi management have met to discuss the possibility of the mass supermarket retailer buying JB Hi Fi. ChannelNews has been told that Woolworths has appointed an external investment team to evaluate the possibility of acquiring the consumer electronics retailers who this week is set to report their latest profit results.

Also working on the possible acquisition is investment bank JP Morgan.

ChannelNews has been told that both the two key sticking points are JB Hi Fi’s management culture and price with JB Hi Fi in an “upper hand” position.

The move would see Woolworths move into a head on position with Harvey Norman with insiders saying that their current operations Dick Smith, Tandy and Power House would be restructured with the possibility of the Power House stores being rolled into the JB Hi Fi network.

A senior retail analyst said” The acquisition of JB Hi is defiantly being discussed and we know that both management teams have met. However we doubt whether anything will happen till JB Hi Fi have reported this week and Woolworths next week.”

ChannelNews has also been told that Woolworths is keen to expand the Clive Anthony brand into Victoria and NSW with the stores being used to sell discounted appliances up alongside the likes of Good Guys, Retrovision, Clive Peters and Bing Lee in NSW.

  JB Hi-Fi recently defied trends by upgrading its profit guidance. Managing director Richard Uechtritz said sales in early July have been “pretty good” with the Company recording record sales of HD flat panel TV’s.
He denied to the AGE newspaper recently that customers shifting to brands with a lower market positioning, such as JB’s “everyday low price” offering, was a major force behind sales growth.
But he said CDs, DVDs and electronic games were taking the place of more expensive forms of leisure.

In February analysts expected the retailer would earn net profits after tax of $32.7 million for the full-year, but JB Hi-Fi is now claiming it could make anywhere between $37 to $39 million, which is at most a 51 per cent increase on profits for the same period last year and a 17 per cent increase on the February prediction.

Retail sales are expected to reach $1.2 billion for the full-year, which is a 30 per cent increase on the 2006 financial year’s sales.