3 reasons why the JB Hi-Fi Limited share price is under fire

Credit: Peter Heath

It’s been a rough year so far for shareholders of JB Hi-Fi Limited (ASX: JBH). The JB Hi-Fi share price has lost nearly 22% so far in 2017 with the shares now fetching less than $22. That compares to a 52-week high of $31.21.

So, what’s gone wrong for the retailer?

  1. The e-commerce behemoth hasn’t even hit Australian shores yet and already investors are freaking out about its impact once it does finally expand down under. Amazon is expected to have an almost immediate impact on Australia’s retail industry, with customer electronics thought to be particularly vulnerable. The Harvey Norman Holdings Limited (ASX: HVN) share price has also fallen almost 30% this year.
  2. Weak Spending: Low wage growth may be one of the contributors towards weak consumer spending, together with a rise in interest rates from the banks. Combined with recent global events, investors may simply be choosing to open their wallets less, for the time being.
  3. Downgrades: A number of other retailers have downgraded their guidance recently, or else issued poor trading updates, including OrotonGroup Limited (ASX: ORL), RCG Corporation Ltd (ASX: RCG), Reject Shop Ltd (ASX: TRS), and Myer Holdings Ltd (ASX: MYR). Investors may interpret those downgrades as poor signs for the industry as a whole.

For investors wanting to gain exposure to the retail sector, JB Hi-Fi shares could be worth a closer look at current levels. That said, you should also be wary of the impact Amazon could have when it arrives in Australia, and ensure you’re comfortable holding for the long-run.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Amazon. Motley Fool contributor Ryan Newman owns shares of Amazon. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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