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Why JB Hi-Fi and Premier Investments are defying ASX retail sector trends

If you follow the travails of Australia’s retail sector, you’ll be fully aware that things are flat. The Australian Bureau of Statistics kindly provides a monthly summary that’s worth adding to your investment research list.

Despite this, I still think there’s great value to be found because there are some notable standouts in the sector that are swimming against the tide. If I was putting my retirement portfolio together today, JB Hi-Fi Limited (ASX: JBH) and Premier Investments Limited (ASX: PMV) would be at the top of my retail sector list.  


JB Hi-Fi had an excellent FY19 and was one of the shining stars that reported full year results back in August. Sales and earnings were both up record levels, with overall sales up 3.5% ($7.1 billion) and net profit after tax growing a very healthy 7.1% ($249.8 million). 

The share price has lifted 65.55% over the past 52 weeks and JB Hi-Fi shares are currently trading for $37.95 at the time of writing. Investors can look forward to a fully franked dividend of 5.33%.

Online sales continue to steadily increase which presents a tremendous opportunity for JB Hi-Fi to build on what is now only 5.5% of total sales.

The retail sector is now firmly focusing on the pre-Christmas trade period. I suspect JB Hi-Fi will continue to do what it has done all year, which is kick goals via quality products, strategic pricing policies and excellent advertising campaigns.

Premier Investments 

Premier Investments had plenty to crow about at its recent full year results presentation. Notable high-end sleepwear designer Peter Alexander and children’s stationer, Smiggle, were among the Premier Investment brands breaking sales records.

Overall group profit was up 11% on FY18 and like JB Hi-Fi, the company is making great strides online. Online sales account for 13.4% of overall sales, also a record on previous results. Investors looking for dividends would be pleased with the fully franked dividend yield of 5.25%.

Over the past 52 weeks the share price at increased 13% in value. Investors looking for clues to future growth can look to increased exposure to Europe via a deal with Amazon for distribution and continued organic growth in Asian markets for Smiggle. Additionally, there’s no reason to suggest that online sales won’t continue their upward trajectory.

Foolish takeaway

There’s no denying some significant headwinds are bearing down on Australia’s retail sector. Despite these market challenges, both JB HI-FI and Premier Investments have put forward a good argument to potential investors that these smart retailers are not only swimming against the tide but thriving.

With JB Hi-Fi currently trading for $37.95 and Premier Investments at $19.30, both are worth your consideration as a long-term investment.

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Motley Fool contributor JWoodward has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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 Scott Phillips.

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