JB Hi-Fi Ltd (ASX: JBH) shares are basking in a buying frenzy today, rising to an unprecedented level.
Australia's well-known retailer is fetching $65.65 per share, up 2% from yesterday. Yet the most impressive number today is $66.33, JB Hi-Fi's new all-time high share price.
The major price milestone is being shared among several ASX 200 companies today, including Commonwealth Bank of Australia (ASX: CBA) and Xero Ltd (ASX: XRO).
However, if you haven't already spotted the difference, JB Hi-Fi is the only record-setter that's also hitting headlines today for being in hot water with the Australian Competition and Consumer Commission (ACCC).
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Promotional problem goes to court
The corporate watchdog is taking a subsidiary of JB Hi-Fi to Federal Court on allegations of 'false or misleading' representations.
According to the release, the ACCC is pursuing The Good Guys for allegedly misrepresenting store credit promotions that were run between July 2019 and August 2023. The promotions, dubbed 'StoreCash,' purportedly failed to give this credit in accordance with their stated requirements.
Specifically, the ACCC alleges the promotions inferred a 'qualifying purchase' was the only condition for store credit despite customers also needing to approve marketing communications.
The legal headache for the JB Hi-Fi subsidiary doesn't stop there. Further allegations are levelled at The Good Guys over expiration periods communicated to customers. On this, ACCC chair Gina Cass-Gottlieb states:
We also understand that, for the majority of promotions, the store credit being offered expired within a very short period of time of ten days or less, which many consumers were unaware of.
If the allegations are true, the ACCC worries shoppers may have purchased items under false pretences.
Lastly, the corporate watchdog also alleges that store credits weren't provided promptly to 'thousands of eligible consumers' even when the consumer met all conditions.
The Good Guys, an electronics and white goods retailer, was acquired by JB Hi-Fi in September 2016 for $870 million.
The ACCC is seeking consumer redress, penalties, and costs, among other actions, through the Federal Court.
Why are JB Hi-Fi shares breaking records?
Despite the worrying legal news, JB Hi-Fi shares are firmly in the green. A tangle with the ACCC appears unable to squash bullish sentiment.
Today's optimism is widespread. Only 37 of the top 200 ASX-listed companies are falling in afternoon trade. Moreover, not a single sector is in the red — a telling sign of indiscriminate confidence in the Australian share market.
Lastly, JB H-Fi addressed the ACCC's actions with an ASX announcement. The company states it 'takes its compliance with the law very seriously and has a comprehensive compliance program in place'. Maybe that's enough to quell any concern among holders of JB Hi-Fi shares for now.
