Over the last few years, games and gaming accessories have been a strong growth category for JB Hi-Fi, helping offset the continued decline of music and movie DVD sales. But for the first half of the 2019-20 financial year, that trend reversed.
JB Hi-Fi released their half-year financial results this week, and overall the yellow-branded retailer is having a good year. Statutory net profit rose 6.6 percent to $170.6 million, surpassing market expectations, and comparable sales across JB’s 199 Australian stores rose by 4.4 percent thanks to increased online sales, particularly sales of Apple products.
But the one sour note in the half-year results presentation, surprisingly, was video games. Software sales for the whole company fell by 18.2 percent, and while JB didn’t note the exact percentage, the company said they saw “a significant decline in the Games Software category as we cycled strong new release titles”.
Software sales make up just over 8 percent of JB’s offering, which isn’t a huge amount comparatively but a notable decline from the first half of 2019, where software sales accounted for 10.6 percent of JB’s total sales. JB also noted 4.8 percent comparable sales growth over the Christmas quarter, and a 5.1 percent increase in total sales to $2.72 billion.
There’s still some hope for games software sales to recover in the second half, however. A few major releases will land before the financial year ends, including Final Fantasy 7 Remake, DOOM Eternal, Animal Crossing: New Horizons and The Last of Us Part 2, but any sales for Cyberpunk 2077 will go into the first half results for 2020-21 after the game was delayed to mid-September.
Another boost to JB’s profits for the rest of the year are also likely to come from phones, phone plans and potentially internet services. The company cited a “national rollout of Telco services in partnership with Telstra” as one of their focus areas for the rest of the 2020 financial year. Telstra’s mobile plans are already promoted through The Good Guys, which JB Hi-Fi owns, and JB’s existing mobile plans use the Telstra network.