JB Hi-Fi Limited: FY26 Result - Facing operating deleverage in FY27E

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

18 August 2026

JB Hi-Fi Limited

Overweight

JBH.AX, JBH AU

Price (17 Aug 26):A$71.65

FY26 Result - Facing operating deleverage in FY27E

▼Price Target (Aug-27):A$83.00

Prior (Aug-27):A$90.00

The focus of JB Hi-Fi’s FY26 result was on the softer than expected 4Q26 and July

updates across JB Hi-Fi Aust and TGG. The demand backdrop remains solid, but

has sequentially slowed over the past four months, albeit to a lesser extent than LFL

sales growth, which was impacted by product release timing, supplier price

increases impacting promotional activity and product availability challenges. For

JB Hi-Fi Aust, we expect sales trends to gradually improve from -1.0% in 1Q27e

to +2.4% in 2Q27e due to baseline effects and the importance of key sale events

in 2Q27e (Black Friday and Boxing Day). We expect FY27e EBIT margins to

contract by -19bps YoY for JB Hi-Fi Aust and -35bps YoY for TGG as wage rates

cannot be offset by reductions in store labour hours and productivity measures.

This is driving Group EBIT and NPAT declines of -1.8% YoY and -2.4% YoY in

FY27e. We cut our EPS forecasts by -5.2% in FY27e, -3.7% in FY28e and -3.5%

in FY28e. We maintain our Overweight rating, however our target price is reduced

from $90.00 to $83.00, driven by earnings downgrades and introducing a -10%

discount to the Broad Industrials in our PERel valuation methodology due to

greater earnings uncertainty.

Sales growth to inflect positively in 2Q27e. We expect sales trends to

gradually improve, most notably through the key sale events in 2Q27e (Black

Friday and Boxing Day). Short-term factors (product release timing, supplier

price increases impacting promotional activity, and product availability

challenges) are likely to ease. Indeed, the Nintendo Switch 2 likely weighed on

4Q26 sales by ~200bps in our view, driving an underlying sales growth of over

+1.0%. July is a volatile, small month of sales that should not be extrapolated

in our view, particularly as the Switch 2 and release timing of the Samsung

Galaxy Fold mobile phone range contributed meaningfully to the -1.4% LFL

sales growth in July.

Promotional intensity in focus.…