Full Year 2026 JB Hi-Fi Ltd Earnings Call

August 17, 2026

Nick Wells: Thank you. Good morning, everyone. Thank you for joining us, and as always, thanks for your interest in the business. We will talk through the presentation and then allow some time for questions. Starting, I will turn to slide 4 titled Group Model. Most of you will be familiar with this slide, so I will quickly summarize it. We have three great brands that are all very complimentary: JB Hi-Fi, The Good Guys, and our most recent addition, E&S. Each brand has its own purpose and a clear focus on specific categories and segments. JB is known for technology and entertainment. The Good Guys is a leader in home appliances, particularly entry to mid-market products and with the replacement customer. E&S is dominant in premium home appliances and bathroom products with a strong focus on the renovation and construction markets, and primarily in Victoria today.

Nick Wells: Thank you. Good morning, everyone. Thank you for joining us, and as always, thanks for your interest in the business. We will talk through the presentation and then allow some time for questions. Starting, I will turn to slide four titled Group Model. Most of you will be familiar with this slide, so I will quickly summarize it. We have three great brands that are all very complimentary: JB Hi-Fi, The Good Guys, and our most recent addition, E&S. Each brand has its own purpose and a clear focus on specific categories and segments. JB is known for technology and entertainment. The Good Guys is a leader in home appliances, particularly entry to mid-market products and with the replacement customer. E&S is dominant in premium home appliances and bathroom products with a strong focus on the renovation and construction markets, and primarily in Victoria today.

Speaker #1: Okay, good morning everyone. Thank you for joining us, and as always, thanks for your interest in the business. We'll talk through the presentation and then allow some time for questions.

Speaker #1: So, by starting, I'll turn to slide 4, titled "Group Model." Most of you will be familiar with this slide, so I'll quickly summarize it.

Speaker #1: We have 3 great brands that are all very complementary: JB Hi-Fi, the good guys, and our most recent addition, ENS. Each brand has its own purpose, and a clear focus on specific categories and segments.

Speaker #1: JB is known for technology and entertainment; the good guys is a leader in home appliances—particularly entry-to-mid-market products—and with the replacement customer, while ENS is dominant in premium home appliances and bathroom products.

Speaker #1: With a strong focus on the renovation and construction markets and primarily in Victoria today. All of our brands go to market across multiple channels, with stores online, over the phone, chat, and commercial.

Nick Wells: All of our brands go to market across multiple channels with stores online, over the phone, chat, and commercial. Our value proposition in each brand is simple: the best brands, a big range, and low prices. We are absolutely known and trusted for value. With our passionate and knowledgeable team members, we consistently deliver exceptional customer service. All of this is supported by our key competitive advantages, which I will talk to on the next slide. Turning to slide 5 and our four key competitive advantages, and just some key call-outs. Firstly, scale and diversification. We have strong and engaged supplier relationships, both globally and locally, that recognize our scale. We have a large, engaged, and diverse customer base and high traffic stores and websites, which provide significant marketing opportunities and reach.

Speaker #1: And our value proposition in each brand is simple: the best brands are big range and low prices. We are absolutely known and trusted for value.

Speaker #1: And with our passionate and knowledgeable team members, we consistently deliver exceptional customer service. All of this is supported by our key competitive advantages, which I'll talk to on the next slide.

Speaker #1: So, turning to slide 5 and our 4 key competitive advantages. And just some key call-outs. Firstly, scale and diversification. We have strong and engaged supplier relationships, both globally and locally, that recognize our scale.

Speaker #1: We have a large, engaged, and diverse customer base, and high traffic stores and websites, which provide significant marketing opportunities and reach. Our multi-brand approach provides us the ability to have diverse and differentiated offers, with a wide range of categories and different go-to-market approaches.

Nick Wells: Our multi-brand approach provides us the ability to have diverse and differentiated offers with a wide range of categories and different go-to-market approaches. Secondly, our low-cost operating model. We have a constant focus on productivity and minimizing unnecessary expenditure, and we are the lowest cost operator in our categories. The efficiency that we get through this model allows us to maintain low prices and drive value for our customers. Third, multi-channel, which is fundamentally about giving customers absolute choice on how they wish to shop with us.

Speaker #1: Secondly, our low-cost operating model. We have a constant focus on productivity and minimizing unnecessary expenditure, and we are the lowest-cost operator in our categories.

Speaker #1: The efficiency that we get through this model allows us to maintain low prices and drive value for our customers. Third, multi-channel, which is fundamentally about giving customers absolute choice on how they wish to shop with us.

Speaker #1: Our stores provide easy access to customers to transact, but are also destinations for discovery and advice. Online, it's used for both research and convenience purchasing, and phone and chat give customers who are not in the store the ability to access staff knowledge and advice along with price negotiability.

Nick Wells: Our stores provide easy access for customers to transact but are also destinations for discovery and advice. Online is used for both research and convenience purchasing, and phone and chat gives customers who are not in the store the ability to access staff knowledge and advice along with price negotiability. Lastly and importantly, people and culture.

Speaker #1: And lastly, and importantly, people and culture. Our knowledgeable and passionate team members provide exceptional customer service. Our dynamic and flexible model allows the business to pivot quickly and adapt to any changing market conditions.

Nick Wells: Our knowledgeable and passionate team members provide exceptional customer service. Our dynamic and flexible model allows the business to pivot quickly and adapt to any changing market conditions. Turning to slide 6. We have today released our FY26 Responsible Business Report, which was previously called our Sustainability Report, and outlines our commitment to having a positive impact on our people, community, and environment, and generating long-term sustainable growth. For our people, we are focused on supporting them and ensuring a safe, inclusive, and respectful workplace, whilst always looking for ways to provide our team members with flexibility and opportunities to grow and develop. For our communities, we seek to make a positive impact in the communities where our team members live and work, and to work with our supplier partners to protect and further human rights.

Speaker #1: Turning to slide 6, we have today released our FY26 responsible business report, which was previously called our sustainability report, and outlines our commitment to having a positive impact on our people, communities, and environment, and generating long-term sustainable growth.

Speaker #1: For our people, we are focused on supporting them and ensuring a safe, inclusive, and respectful workplace, whilst always looking for ways to provide our team members with flexibility and opportunities to grow and develop.

Speaker #1: For our communities, we seek to make a positive impact in the communities where our team members live and work, and to work with our supplier partners to protect and further human rights.

Speaker #1: And for the environment, we are committed to minimizing the impact that our operations may have on the natural environment and proactively reducing our waste and emissions.

Nick Wells: For the environment, we are committed to minimizing the impact that our operations may have on the natural environment and proactively reducing our waste and emissions. We are making some really great progress on our initiatives, with examples like 68% of our energy now coming from renewable sources and recycling 12,000 tons of e-waste in the last 12 months. I would encourage you to read the report to get a full update. Now turning to the group FY26 performance and starting on slide 8. We will talk to the results in more detail as we move through the presentation, but we are pleased to report record sales and solid earnings for FY26. In a retail environment where customers are seeking value, our brands continue to resonate and our teams continue to execute to a high standard.

Speaker #1: We are making some really great progress on our initiatives, with examples like 68% of our energy now coming from a renewable sources, and recycling 12,000 tons of e-waste in the last 12 months.

Speaker #1: I'd encourage you to read the report to get a full update. Now, turning to the group FY26 performance and starting on slide 8. We will talk to the result in more detail as we move through the presentation, but we are pleased to report record sales and solid earnings for FY26.

Speaker #1: In a retail environment where customers are seeking value, our brand continues to resonate, and our teams continue to execute to a high standard. Total sales exceeded 11 billion dollars for the first time, up 4.8% on FY25 to 11.06 billion.

Nick Wells: Total sales exceeded AUD 11 billion for the first time, up 4.8% on FY25 to AUD 11.86 billion. EBIT was AUD 734.4 million, up 3.8% on FY25 underlying EBIT and up 5.8% on FY25 statutory EBIT. EPS was AUD 448.1 cents per share, up 2.9% on FY25 underlying EPS and up 5.9% on FY25 statutory EPS. We today declared a final dividend of AUD 127 cents per share, up AUD 22 cents per share or 21%, bringing the total dividend for FY26 to AUD 337 cents per share, up AUD 62 cents per share or 22.5% and representing 75% of NPAT.

Speaker #1: EBIT was 734.4 million, up 3.8% on FY25, underlying EBIT, and up 5.8% on FY25, statutory EBIT, EPS was 448.1 cents per share, up 2.9% on FY25, underlying EPS, and up 5.9% on FY25, statutory EPS, and we today declared a final dividend of 127 cents per share, up 22 cents per share, or 21%, bringing the total dividend for FY26 to 337 cents per share, up 62 cents per share, or 22.5%, and representing 75% of impact.

Speaker #1: We'll take slide 9 as read and turn to divisional performance, starting with JB Hi-Fi Australia on page 10. So, on slide 10, in what has been a unique period for the technology categories, with significant supplier price rises and availability challenges, we were pleased to report growth in sales and earnings in JB Hi-Fi Australia.

Nick Wells: We will take slide 9 as read and turn to divisional performance starting with JB Hi-Fi Australia on page 10. On slide 10, in what has been a unique period for the technology categories with significant supplier price rises and availability challenges, we were pleased to report growth in sales and earnings in JB Hi-Fi Australia. I will turn to slide 11 and cover in greater detail. Total sales increased by 4.4% to AUD 7.42 billion, with comparable sales up 3.2%. From a category perspective, it was a good year for computers, with growth across a number of key brands and good results from our AI-enabled PCs and Gaming PCs. Mobile phones continue to perform well, with growth both in units and in ASP driving sales growth.

Speaker #1: I'll turn to slide 11 and cover in greater detail. Total sales increased by 4.4% to 7.42 billion, with comparable sales up 3.2%. From a category perspective, it was a good year for computers, with growth across a number of key brands, and good results from our AI-enabled PCs and gaming PCs.

Speaker #1: Mobile phones continue to perform well, with growth both in units and in ASP driving sales growth. Within fitness, wearables continue to perform strongly, but we've also seen successful results from our newly expanded health and wellbeing categories.

Nick Wells: Within fitness, wearables continue to perform strongly, but we have also seen successful results from our newly expanded health and wellbeing categories. In small appliances, the momentum remains strong with lots of innovation. Coffee, robotic vacuums, and kitchen appliances all performed well, as did our expanded personal care categories. Our IT category saw strong sales growth, particularly in the H2, with customers responding well to new products. Online sales increased by 7% to AUD 1.28 billion, or 17.2% of total sales. Sales growth in Q4 was impacted by supplier price rises and stock availability shortages in some of the key tech categories, along with cycling the Nintendo Switch 2 release in the prior year. Gross profit increased by 4.2% to AUD 1.63 billion, with gross margin down five basis points to 21.94%, driven by sales mix. This was a solid result in a competitive environment.

Speaker #1: In smaller appliances, the momentum remains strong, with lots of innovation. Coffee robotic vacuums and kitchen appliances all performed well, as did our expanded personal care categories.

Speaker #1: Our IT category saw strong sales growth, particularly in the second half, with customers responding well to new products. Online sales increased by 7% to 1.28 billion, or 17.2% of total sales.

Speaker #1: Sales growth in Q4 was impacted by supplier price rises and stock availability shortages in some of the key tech categories, along with cycling the Nintendo Switch 2 release in the prior year.

Speaker #1: Gross profit increased by 4.2% to 1.63 billion, with gross margin down 5 basis points to 21.94%, driven by sales mix. This was a solid result in a competitive environment.

Speaker #1: So, lots of doing business with 12.46% up 4 basis points in an absolute terms grew 4.8%, with continued cost control and investment in new stores and strategic initiatives.

Nick Wells: Cost of doing business was 12.46%, up 4 basis points. In absolute terms, it grew 4.8% with continued cost control and investment in new stores and strategic initiatives. EBIT increased by 3.2% to AUD 547.3 million, with EBIT margins down 9 basis points to 7.38%. Over to slide 12 and JB Hi-Fi New Zealand performance. It was pleasing to see our performance improve in New Zealand and to record strong sales and earnings growth, having been investing in growing the business in the New Zealand market over the past few years. I will turn to slide 13 and cover in greater detail. Total sales increased by 26% to NZD 499.5 million, with comparable sales really pleasingly up 15.3% as the business continues to resonate with customers and expand its reach. Like Australia, results from mobile phones, computers, and small appliances have been strong.

Speaker #1: EBIT increased by 3.2% to 547.3 million, with EBIT margin down 9 basis points to 7.38%. Over to slide 12 and JB Hi-Fi New Zealand performance.

Speaker #1: It was pleasing to see our performance improve in New Zealand and to record strong sales and earnings growth, having been investing in growing the business in the New Zealand market over the past few years.

Speaker #1: I will turn to slide 13 and cover in greater detail. Total sales increased by 26% to New Zealand 499.5 million, with comparable sales really pleasingly up 15.3% as the business continues to resonate with customers and expand its reach.

Speaker #1: Like Australia, results from mobile phones, computers, and small appliances have been strong. In audio, we are doing well in headphones, soundbars, and party speakers, while games hardware benefited from a full year of the Nintendo Switch 2.

Nick Wells: In audio, we are doing well in headphones, sound bars, and party speakers, while games hardware benefited from a full year of the Nintendo Switch 2. Online sales increased by 36.7% to NZD 86.2 million or 17.3% of total sales. Gross profit increased by 29.1% to NZD 86.9 million, with gross margin up 41 basis points to 17.41%, driven by improvements in key product and services categories. Cost of doing business was 13.66%, down 106 basis points, and in absolute terms grew 17% with continued investment in new stores and strategic initiatives. Operating leverage from strong sales growth and disciplined cost control resulted in EBIT of NZD 4.1 million, up NZD 4.3 million, with EBIT margin up 88 basis points to 2.82%. Now turning to The Good Guys on slide 14.

Speaker #1: Online sales increased by 36.7% to New Zealand 86.2 million, or 17.3% of total sales. Gross profit increased by 29.1% to New Zealand 86.9 million, with gross margin up 41 basis points to 17.41%, driven by improvements in key product and services categories.

Speaker #1: Continuing business with 13.66%, down 106 basis points, and in absolute terms grew 17%, with continued investment in new stores and strategic initiatives. Operating leverage from strong sales growth and disciplined cost control resulted in EBIT of New Zealand 4.1 million, up New Zealand 4.3 million, with EBIT margin up 88 basis points to 0.82%.

Speaker #1: Now, turning to the good guys on slide 14. It was a really pleasing result for the good guys, with strong execution by the team, driving solid sales growth and strong growth in earnings.

Nick Wells: It was a really pleasing result for The Good Guys, with strong execution by the team driving solid sales growth and strong growth in earnings. I will turn to slide 15 and cover in greater detail. Total sales increased by 2.7% to AUD 2.94 billion, with comparable sales up 2.7%. Portable appliances growth was led by continued innovation in the category and solid results in coffee. Floor care continues to show strong growth, underpinned by growth in robotic vacuums. Cooking growth was driven by growth in inbuilt cooking and range hoods. Refrigeration growth was driven by consumers shifting into larger capacity models, and audio also performed well, led by headphones. Online sales increased by 13.1% to AUD 481.3 million or 16.4% of total sales. In a weaker home appliance market in Q4, The Good Guys continued to execute strongly and take market share.

Speaker #1: I'll turn to slide 15 and cover in greater detail. Total sales increased by 2.7% to 2.94 billion, with comparable sales up 2.7%. Portable appliances growth was led by continued innovation in the category and solid results in coffee.

Speaker #1: Floor care continues to show strong growth, underpinned by growth in robotic vacuums. Cooking growth was driven by growth in in-built cooking and range hoods.

Speaker #1: Refrigeration growth was driven by consumers shifting into larger capacity models. And audio also performed well, led by headphones. Online sales increased by 13.1% to 481.3 million, or 16.4% of total sales.

Speaker #1: In a week-to-home appliance market in Q4, the good guys continued to execute strongly and take market 698.9 million, with gross margin up 27 basis points to 23.74%, driven by improvements in key product categories as we continued to grow.

Nick Wells: Gross profit increased by 3.9% to AUD 698.9 million, with gross margin up 27 basis points to 23.74%, driven by improvement in key product categories as we continue to grow. Cost of doing business was 14.25%, up 8 basis points, and in absolute terms grew 3.3% with continued disciplined cost control. EBIT increased by 6% to AUD 184 million, with EBIT margins up 19 basis points to 6.25%. Now turning to E&S on slide 16. FY26 in E&S has been heavily focused on integrating E&S into the broader group and investing in the systems, processes, and capability to set the business up for future growth. I will turn to slide 17 and cover in greater detail. In E&S, total sales for the 12 months to 30 June 2026 were AUD 273.1 million.

Speaker #1: Lots of doing business with 14.25%, up 8 basis points, and in absolute terms grew 3.3%, with continued disciplined cost control. EBIT increased by 6% to 184 million, with EBIT margin up 19 basis points to 6.25%.

Speaker #1: Now, turning to E&S on slide 16. FY26 in E&S has been heavily focused on integrating E&S into the broader group and investing in the systems, processes, and capability to set the business up for future growth.

Speaker #1: I'll turn to slide 17 and cover in greater detail. In E&S, total sales for the 12-month to 30 June 2026 were 273.1 million. In FY25, the group consolidated 10-month sales and, as a result, on a statutory basis, FY26 sales were up 21.3%.

Nick Wells: In FY25, the group consolidated 10-month sales. As a result, on a statutory basis, FY26 sales were up 21.3%. For comparative purposes, for the full 12 months, total sales were down 0.2%, with comparable sales down 3.2%. Sales revenue has been impacted by the migration of wholesale sales to agency sales that, for external reporting purposes, are recognized as a commission only. Total sales on a gross basis were up on the prior year. Gross profit was AUD 81.2 million, with gross margin at 29.72%, up 117 basis points, driven by sales mix and the migration to agency sales. Cost of doing business was 26.15%, up 284 basis points, driven by investments in strategic initiatives, including in stores and the commercial division, which are generating written sales growth that will be delivered and recognized in future periods.

Speaker #1: The comparative purposes for the full 12 months, total sales were down 0.2%, with comparable sales down 3.2%. Sales revenue has been impacted by the migration of wholesale sales to agency sales.

Speaker #1: That's the external reporting purposes are recognized as a commission only. Total sales on a gross basis were up on the prior year. Gross profit was 81.2 million, with gross margin at 29.72%, up 117 basis points, driven by sales mix and the migration to agency sales.

Speaker #1: Lots of doing business with 26.15%, up 284 basis points, driven by investments in strategic initiatives, including in stores and the commercial division, which are generating written sales growth that will be delivered and recognized in future periods.

Nick Wells: Cost of doing business was 26.15%, up 284 basis points, driven by investments in strategic initiatives, including in stores and the commercial division, which are generating written sales growth that will be delivered and recognized in future periods. EBIT was -AUD 0.4 million as the business invests in strategic initiatives that are setting us up for strong growth over the coming years. I will now hand over to Dave for the balance sheet and cash flow.

Speaker #1: EBIT was negative 0.4 million, as the business invests in strategic initiatives that are setting us up for strong growth over the coming years. I will now hand over to Dave for the balance sheet and cash flow.

Nick Wells: EBIT was -AUD 0.4 million as the business invests in strategic initiatives that are setting us up for strong growth over the coming years. I will now hand over to Dave for the balance sheet and cash flow.

Speaker #2: Thanks, Nick. On slide 19, the balance sheet and starting with inventory. Inventory was 1.36 billion, up 4.5%, or 57.9 million, year on year. Inventory turnover was down 24 basis points, to 6.46 times.

David Giansalvo: Thanks, Nick. On slide 19, the balance sheet and starting with inventory. Inventory was AUD 1.36 billion, up 4.5% or AUD 57.9 million year on year. Inventory turnover was down 24 basis points to 6.46 times. Payables, which would ordinarily move in line with inventory, were down 5.2%, or AUD 46.8 million year on year, as inventory in the technology categories was purchased earlier in Q4 to buy ahead of supply price rises and to secure stock leading into the key June promotional period. As a result, net working capital was AUD 160.8 million, up AUD 85.2 million year on year. On slide 20, highlights on the cash flow statement. Operating cash flows and operating cash conversion, while down year on year due to the increased working capital in June, continue to be strong.

Dave Giansalvo: Thanks, Nick. On slide 19, the balance sheet and starting with inventory. Inventory was AUD 1.36 billion, up 4.5% or AUD 57.9 million year on year. Inventory turnover was down 24 basis points to 6.46 times. Payables, which would ordinarily move in line with inventory, were down 5.2%, or AUD 46.8 million year on year, as inventory in the technology categories was purchased earlier in Q4 to buy ahead of supply price rises and to secure stock leading into the key June promotional period. As a result, net working capital was AUD 160.8 million, up AUD 85.2 million year on year. On slide 20, highlights on the cash flow statement. Operating cash flows and operating cash conversion, while down year on year due to the increased working capital in June, continue to be strong.

Speaker #2: Payables, which were ordinarily moving in line with inventory, were down 5.2%, or 46.8 million, year on year, as inventory in the technology categories was purchased earlier in Q4 to buy ahead of supplier price rises, and to secure stock leading into the key June promotional period.

Speaker #2: As a result, networking capital was 160.8 million, up 85.2 million, year on year. On slide 20, highlights on the cash flow statement. Operating cash flows and operating cash conversion, while down year on year, due to the increased working capital in June, continue to be strong.

Speaker #2: Capex was 87.4 million, up 6.4%, or 5.3 million, year on year, with investment in the store portfolio online and strategic initiatives. Dividends paid of 453.7 million, which is up 68 million year on year, and results from the payment of the FY25 special dividend that occurred in September, and the increase to the dividend payout ratio, for the interim dividend that was paid in March, and represented 75% of NPAT.

David Giansalvo: CapEx was AUD 87.4 million, up 6.4% or AUD 5.3 million year on year, with investment in the store portfolio, online and strategic initiatives. Dividends paid of AUD 453.7 million, which is up AUD 68 million year on year and results from the payment of the FY25 special dividend that occurred in September, and the increase to the dividend payout ratio for the interim dividend that was paid in March and represented 75% of NPAT. Net cash was AUD 206.5 million, with continued strong cash generation offset by the increase in working capital and incremental dividends paid. On slide 21, capital management. As announced in August 2025, from FY26, the board increased the dividend payout ratio from 65% to a range of 70% to 80% of NPAT.

Dave Giansalvo: CapEx was AUD 87.4 million, up 6.4% or AUD 5.3 million year on year, with investment in the store portfolio, online and strategic initiatives. Dividends paid of AUD 453.7 million, which is up AUD 68 million year on year and results from the payment of the FY25 special dividend that occurred in September, and the increase to the dividend payout ratio for the interim dividend that was paid in March and represented 75% of NPAT. Net cash was AUD 206.5 million, with continued strong cash generation offset by the increase in working capital and incremental dividends paid. On slide 21, capital management. As announced in August 2025, from FY26, the board increased the dividend payout ratio from 65% to a range of 70% to 80% of NPAT.

Speaker #2: Net cash was 206.5 million, with continued strong cash generation, offset by the increase in working capital and incremental dividends paid. On slide 21, capital management.

Speaker #2: As announced in August 2025, from FY26, the board increased the dividend payout ratio from 65% to a range of 70 to 80 percent of NPAT.

Speaker #2: The final dividend announced today is 127 cents per share, fully franked, up 22 cents per share, or 21%, bringing the total ordinary dividend for FY26 to 337 cents per share, up 62 cents per share, or 22.5%, and represents 75% of NPAT.

David Giansalvo: The final dividend announced today is AUD 1.27 per share, fully franked, up AUD 0.22 per share or 21%, bringing the total ordinary dividend for FY26 to AUD 3.37 per share, up AUD 0.62 per share or 22.5%, and represents 75% of NPAT. The record date for the final dividend is 28 August, with payment to be made on 11 September. The group continues to maintain a strong balance sheet, and this gives us additional flexibility to manage through the current operating environment. The board will continue to review the group's capital structure with a focus on maximizing returns to shareholders and maintaining balance sheet strength and flexibility. I will now hand back to Nick to go through the group focus areas for FY27.

Dave Giansalvo: The final dividend announced today is AUD 1.27 per share, fully franked, up AUD 0.22 per share or 21%, bringing the total ordinary dividend for FY26 to AUD 3.37 per share, up AUD 0.62 per share or 22.5%, and represents 75% of NPAT. The record date for the final dividend is 28 August, with payment to be made on 11 September. The group continues to maintain a strong balance sheet, and this gives us additional flexibility to manage through the current operating environment. The board will continue to review the group's capital structure with a focus on maximizing returns to shareholders and maintaining balance sheet strength and flexibility. I will now hand back to Nick to go through the group focus areas for FY27.

Speaker #2: The record date for the final dividend is the 28th of August, with payments to be made on the 11th of September. The group continues to maintain a strong balance sheet.

Speaker #2: And this gives us additional flexibility to manage through the current operating environment. The board will continue to review the group's capital structure, with a focus on maximizing returns to shareholders, and maintaining balance sheet strength and flexibility.

Speaker #2: I will now hand back to Nick to go through the group focus areas for FY27.

Speaker #1: Thanks, Dave. I'll now turn to the group focus areas on page 23. We have five key areas of focus for the next 12 months, which will drive both short-term and long-term growth.

Nick Wells: Thanks, Dave. I will now turn to the group focus areas on page 23. We have five key areas of focus for the next 12 months, which will drive both short-term and long-term growth. These are retail execution, store growth, multi-channel growth, supply chain, and ANS expansion. I will talk to each on the next slides. Turning to slide 24, retail execution. In a competitive retail environment, our strong retail execution remains essential. We will continue to actively demonstrate and prove value to our customers and utilize our supplier relationships to access stock, create best-in-market promotions, and win at key sales events. In an environment where we have seen significant supplier price rises, we will use the breadth of our range, brands, and price points to give customers choice to trade up or to trade down.

Speaker #1: These are retail execution, store growth, multi-channel growth, supply chain, and E&S expansion. I'll talk to each on the next slide. So turning to slide 24, retail execution.

Speaker #1: In a competitive retail environment, our strong retail execution remains essential. We will continue to actively demonstrate and prove value to our customers, and utilize our supplier relationships to access stock, create best-in-market promotions, and win at key sales events.

Speaker #1: In an environment where we have seen significant supplier price rises, we'll use the breadth of our range brands and price points to give customers choice to trade up or to trade down.

Speaker #1: We will keep our operating model simple and efficient, focusing on the metrics that matter, like converting on our strong customer traffic, and we'll drive operational efficiencies and productivity, with initiatives like electronic shelf labels to enhance our in-store experience, and enable us to invest in customer-facing roles and in-store service for our knowledgeable, passionate team members.

Nick Wells: We will keep our operating model simple and efficient, focusing on the metrics that matter, like converting on our strong customer traffic, and we will drive operational efficiencies and productivity with initiatives like electronic shelf labels to enhance our in-store experience and enable us to invest in customer-facing roles and in-store service for our knowledgeable, passionate team members. Turning to slide 25. We will continue to grow our store network with both new store openings and expansions in FY27. In JB Hi-Fi Australia, we will open four new stores, continuing our expansion into regional locations and relocate one store. In JB Hi-Fi New Zealand, we will open two new stores and relocate one store. In The Good Guys, we will open one new store and relocate five stores and extend two stores to right-size previously undersized stores and grow our available selling space. Moving to slide 26 and multi-channel growth.

Speaker #1: Turning to slide 25, we'll continue to grow our store network, with both new store openings and expansions in FY27. In JB Hi-Fi Australia, we'll open four new stores, continuing our expansion into regional locations, and relocate one store.

Nick Wells: In JB Hi-Fi Australia, we will open four new stores, continuing our expansion into regional locations and relocate one store. In JB Hi-Fi New Zealand, we will open two new stores and relocate one store. In The Good Guys, we will open one new store and relocate five stores and extend two stores to right-size previously undersized stores and grow our available selling space. Moving to slide 26 and multi-channel growth.

Speaker #1: In JB Hi-Fi New Zealand, we'll open two new stores and relocate one store. And in the good guys, we'll open one new store and relocate five stores and extend two stores, to right-size previously undersized stores and grow our available selling space.

Speaker #1: Moving to slide 26 and multi-channel growth. We'll continue to strengthen our multi-channel capability, leveraging our significant online and in-store traffic. We'll grow our online phone and chat sales to meet customers' changing shopping needs, evolve our websites with expanded agentic commerce experiences that will include natural language product search and agent-based shopping experiences, and expand our marketplace offer.

Nick Wells: We will continue to strengthen our multi-channel capability, leveraging our significant online and in-store traffic. We will grow our online phone and chat sales to meet customers' changing shopping needs. Evolve our websites with expanded agent commerce experiences that will include natural language product search and agent-based shopping experiences, and expand our marketplace offer. Our membership programs will remain a focus, delivering personalization at scale. At the same time, we will ensure consistent customer experiences across all touch points and stay connected with shoppers however their shopping journeys evolve. We will grow our commercial business and expand our retail media network, providing more options for our partners to leverage our strong online and in-store traffic to create unique multi-channel advertising experiences. Turning to slide 27 and supply chain. Our investment in building and maintaining a fit-for-purpose supply chain network is ongoing.

Speaker #1: Our membership programs will remain a focus, delivering personalization at scale. At the same time, we'll ensure consistent customer experiences across all touchpoints, and stay connected with shoppers however their shopping journeys evolve.

Nick Wells: At the same time, we will ensure consistent customer experiences across all touch points and stay connected with shoppers however their shopping journeys evolve. We will grow our commercial business and expand our retail media network, providing more options for our partners to leverage our strong online and in-store traffic to create unique multi-channel advertising experiences. Turning to slide 27 and supply chain. Our investment in building and maintaining a fit-for-purpose supply chain network is ongoing.

Speaker #1: We will grow our commercial business and expand our retail media network, providing more options for our partners to leverage our strong online and in-store traffic to create unique multi-channel advertising experiences.

Speaker #1: Turning to slide 27 and supply chain. Our investment and in building and maintaining a fit-for-purpose supply chain network is ongoing. We will continue to focus on delivering best-in-class delivery options for our customers across all of our channels, and leverage our new transport management system to improve the customer experience.

Nick Wells: We will continue to focus on delivering best-in-class delivery options for our customers across all of our channels and leverage our new transport management system to improve the customer experience. We will expand our big and bulky Home Delivery Centres, starting with Melbourne, to extend our range and maximize in-stock positions. We will also expand our HDC delivery network to open up big and bulky product range and depth to more regional customers. For peak this year, we will expand our centralized online fulfillment and roll out semi-bulky store replenishment for high-volume lines for selected JB Hi-Fi Victoria, New South Wales, and Western Australian stores. Turning to the final focus area, E&S, on slide 28. We are investing in E&S for future growth, and we are really excited about the opportunity we have to grow E&S.

Speaker #1: We'll expand our big and bulky home delivery centers, starting with Melbourne, to extend our range and maximize in-stock positions, and we'll also expand our HDC delivery network to open up big and bulky product range and depth to more regional customers.

Speaker #1: For peak this year, we'll expand our centralized online fulfillment and roll out semi-bulky store replenishment for high-volume lines for selected JB Hi-Fi Victoria, New South Wales, and Western Australian stores.

Speaker #1: And turning to the final focus area, E&S on slide 28. We are investing in E&S for future growth, and we are really excited about the opportunity we have to grow E&S.

Speaker #1: It is a business that gives us access to expanded product categories and different customers, such as developers and large commercial builders, that we don't cater for in JB and the good guys.

Nick Wells: It is a business that gives us access to expanded product categories and different customers, such as developers and large commercial builders, that we do not cater for in JB and The Good Guys. We have made some key management appointments who bring significant industry experience and started building out our commercial team outside of Victoria. We have commenced work to migrate our website to Shopify, which will be completed in the H2 FY27 and will significantly improve our online customer experience. In addition to the website, we are building our internal systems and tools to support our future growth. From a store perspective, we have developed a new store layout that reinforces the E&S experience, and we have started work on identifying potential new store locations to expand our reach nationally. Now moving to slide 30 and the group trading update.

Speaker #1: We've made some key management appointments who bring significant industry experience and started building out our commercial team outside of Victoria. We've commenced work to migrate our website to Shopify, which will be completed in the second half of FY27, and will significantly improve our online customer experience.

Speaker #1: In addition to the website, we're building our internal systems and tools to support our future growth. From a store perspective, we've developed a new store layer that reinforces the E&S experience, and we've started work on identifying potential new store locations to expand our reach nationally.

Speaker #1: So now moving to slide 30 and the group trading update. For the period 1 July to 31 July 2026, total sales growth for JB Hi-Fi Australia was negative 0.5%, with comparable sales growth of negative 1.4%.

Nick Wells: For the period 1 July to 31 July 2026, total sales growth for JB Hi-Fi Australia was -0.5%, with comparable sales growth of -1.4%. Total sales growth for JB Hi-Fi New Zealand was 20.9%, with comparable sales growth of 11.7%. Total sales growth for The Good Guys was -1.7%, with comparable sales growth also -1.7%. Total sales growth for E&S was -2.7%, with comparable sales growth of -4%. We continue to see variability in trading, with customers increasingly looking for value and migrating spending to key promotional events, noting that July is not a big promotional period. In the technology categories, sales growth continues to be impacted by supplier price rises and stock availability. We expect the retail environment to remain uncertain in the short term.

Speaker #1: Total sales growth for JB Hi-Fi New Zealand was 20.9%, with comparable sales growth of 11.7%. Total sales growth for the good guys was negative 1.7%, with comparable sales growth also negative 1.7%.

Speaker #1: And total sales growth for E&S was negative 2.7%, with comparable sales growth of negative 4%. We continue to see variability in trading, with customers increasingly looking for value and migrating spending to key promotional events, noting that July isn't a big promotional period.

Speaker #1: In the technology categories, sales growth continues to be impacted by supplier price rises and stock availability. We expect the retail environment to remain uncertain in the short term.

Speaker #1: As we always have, we'll continue to focus on driving demand and growing market share for creating great value offers for our customers, leveraging our strong supplier relationships to maximize stock allocations and delivering exceptional customer service.

Nick Wells: As we always have, we will continue to focus on driving demand and growing market share through creating great value offers for our customers, leveraging our strong supplier relationships to maximize stock allocations, and delivering exceptional customer service. Over now to our investment checklist on page 32. You will all know this well, so I will not go through it in detail. However, I will highlight a few points that will continue to drive our success. We are the scale operator and leader in our market with three unique and relevant brands that are known and trusted for value. We have a diverse and resilient product range, from essential technology to replacement home appliances and continued product and category innovation. We have a flexible business model with a proven ability to adapt and grow and a very experienced management team. Thank you, and we will now open up to questions.

Speaker #1: Over now to our investment checklist on page 32. You will all know this well, so I won't go through it in detail. However, I will highlight a few points that will continue to drive our success.

Speaker #1: We're to scale operator and leader in our market with three unique and relevant brands that are known and trusted for value. We have a diverse and resilient product range, from essential technology to replacement home appliances, and continued product and category innovation.

Speaker #1: We have a flexible business model with a proven ability to adapt and grow, and a very experienced management team. Thank you, and we'll now open up to questions.

Speaker #2: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Just a reminder for two questions per person. Your first question comes from Shaun Cousins with UBS.

Speaker #2: If you're on a speakerphone, please pick up the handset to ask your question. Just a reminder for two-question per person. Your first question comes from Sean Cousins with UBS.

Speaker #3: Thanks. Good morning, Nick and David. My first question just around revenue. Negative comps in JB Australia and good guys for July 26, that's the first period of negative comps you've done since 2014X, sort of COVID period.

Shaun Cousins: Thanks. Good morning, Nick and David. My first question, just around revenue. Negative comps in JB Hi-Fi Australia and The Good Guys for July 2026, that is I think the first period of negative comps you have done since 2014 ex sort of COVID period. How much of this was the tough macro, be it cost of living, higher interest rates, falling house prices post the budget, versus how much of it was, I guess, rising computer chip prices there with elasticity, somewhat of a new headwind and/or availability issues there? Just keen to sort of dig into what are the drivers of the negative comps for July, please, in your two main businesses.

Speaker #3: How much of this was the tough macro, the cost of living, higher interest rates, falling house prices post the budget versus how much of it was, I guess, rising computer chip prices there with elasticity, somewhat of a new headwind and/or availability issues there?

Speaker #3: Just keen to sort of dig into what are the drivers of the negative comps for July, please, in your two main businesses.

Speaker #1: Yeah, Sean, it's a it's a bit of a combination of everything. Yes, from a macro perspective, it has got a little bit harder. But like I said in my commentary, I think it is one month, and it is a small month, and I would say it's not a promotional period.

Nick Wells: Yeah. Shaun, it is a bit of a combination of everything. Yes, from a macro perspective, it has got a little bit harder. But like I said in my commentary, I think it is one month and it is a small month, and I would say it is not a promotional period. What we can see is that those promotional periods have become increasingly important when customers are looking for value. Periods like end of financial year in June and Black Friday become really important and then maybe it sucks a little bit out of those non-promotional periods like July. I think that is one component to it. In JB Hi-Fi Australia, we are still seeing some sort of one-off type impacts from cycling. There is a little bit of impact.

Speaker #1: And what we can see is that those promotional periods have become increasingly important when customers are looking for value. And so periods like end of financial year in June and Black Friday become really important, and then maybe it sucks a little bit out of those non-promotional periods like July.

Speaker #1: So I think that's one component to it. We are in JB Australia, we are still seeing some sort of one-off type impacts from cycling.

Speaker #1: So there is a little bit of impact. There's cycling Nintendo Switch 2 in the prior year in July as well, like there was in Q4.

Nick Wells: There is like in Nintendo Switch 2 in the prior year in July as well like there was in Q4. There is a bit of a change to timing of Samsung Fold release into August this year instead of July last year. Then it is the price rises and the availability, which are kind of impacting quite broadly. It does vary depending on the supplier, but we have seen pretty material price rises and post those price rises, we are seeing changes to the, I suppose, the frequency of promotional activity and changes to both the length and depth of some of that promotional activity. So, that is also having an impact.

Speaker #1: There's a bit of a change to timing of Samsung Fold release, into August this year instead of July. Last year, and then it is the price rises and the availability, which are kind of impacting quite broadly.

Speaker #1: And it does vary depending on the supplier, but we have seen pretty material price rises, and post those price rises, we are seeing changes to the, I suppose, the frequency of promotional activity and changes to both the length and depth of some of that promotional activity.

Speaker #1: So that is also having an impact.

Speaker #3: Great. Okay. Thank you. Maybe just regarding sort of gross margins, you highlighted negative mix changes in the second half '26. Can you maybe sort of discuss sort of what they were, and then you've also sort of called out the risk to gross margins a little bit in July.

Shaun Cousins: Great. Okay. Thank you. Maybe just regarding sort of gross margins, you highlighted negative mix changes in H2 2026. Can you maybe sort of discuss what they were? You also sort of called out the risk to gross margins a little bit in July. You sort of had customers looking for value migrating spend to promotional events and then, obviously the consumer seeking sort of great value there. We are sort of keen to understand what the outlook for gross margins could be and, can you sustain the 22% gross margin that you have been able to achieve for a very long time?

Speaker #3: You sort of had customers looking for value, migrating spend to promotional events, and then just the consumers seeking sort of great value there. I'm just sort of keen to understand what the outlook for gross margins could be, and can you sustain the 22% gross margin that you've been able to achieve for a very long time?

Speaker #1: Yeah. I think it's, like I said, it is a very value-driven market, and it's very promotional and competitive. But I think, as we've done well over an extended period of time, we've been able to manage it.

Nick Wells: Yeah, I think, like I said, it is a very value-driven market and it is very promotional and competitive, but I think, as we have done well over an extended period of time, we have been able to manage it. I think you can see in JB Hi-Fi Australia, we have consistently said it should be circa 23%. It is a little bit under, over the course of FY26, which is primarily driven by sales mix, and that is mixing more into some of the tech categories and probably a little bit weaker sales in a category like TV or some of the higher gross margin categories. So it feels like we are managing it well, still feel confident that we can continue to compete and we are pretty used to operating in a highly competitive environment. From that perspective, okay.

Speaker #1: And I think you can see in JB in Australia, we're consistently said it should be circa 23%. It's a little bit under over the course of FY '26, which is primarily driven by sales mix, and that is mixing into mixing more into some of the tech categories.

Speaker #1: And probably a little bit weaker sales in a category like TV or some of the higher gross margin categories. So it feels like we're managing it well, still feel confident that we can continue to compete and we're pretty used to operating in a highly competitive environment.

Speaker #1: So from that perspective, okay. In FY '26, we have had a little bit of impact from, again, as these price rises roll through from suppliers, we have a pretty efficient stock model and low weeks cover.

Nick Wells: In FY26, we have had a little bit of impact from, again, as these price rises roll through from suppliers. We have a pretty efficient stock model and low weeks cover. So we have typically got more of the newer stock at a higher price point compared to our competitors who might have the older stock at the cheaper price. That again, was something that was in there in the H2 that we had to manage. Overall, confident in JB Hi-Fi Australia that we can still sort of target that 22% gross margin. In The Good Guys, you can see there, strong gross margin in The Good Guys. The Good Guys team is doing a really good job of working with suppliers around leveraging our scale and making sure we are rewarded for our growth in what has been a tougher market in those home appliance categories.

Speaker #1: So we're typically got more of the newer stock at the higher price point compared to our competitors who might have the older stock at the cheaper price.

Speaker #1: So that, again, with something that was in there in the second half that we had to manage. But overall, confident in JB Australia that we can still sort of target that 22% gross margin.

Speaker #1: And then good guys, you can see their strong gross margin in good guys. The good guys team doing a really good job of working with suppliers around leveraging our scale and making sure we're rewarded for our growth in what it has been a tougher market in a time of price categories.

Speaker #3: Great. Thank you very much, Nick.

Shaun Cousins: Great. Thank you very much, Nick.

Speaker #2: Your next question comes from Adrian Lemmy with Citi.

Operator: Your next question comes from Adrian Lemme with Citi.

Speaker #3: Hi. Good morning, Nick and David. Just wanted to pick up on your comment there on TVs. We talked about six months ago that the comps were starting to get a bit easier in that category, but it doesn't seem to be turning around.

Adrian Lemme: Hi. Good morning, Nick and David. I just wanted to pick up on your comment there on TVs. We talked about 6 months ago that the comps were starting to get a bit easier in that category, but it doesn't seem to be turning around. Are you able to sort of talk a bit on that category for us?

Speaker #3: Brief, are you able to sort of talk a bit on that category for us?

Speaker #1: Yeah. Adrian hasn't materially changed. To your point, we started to, we are lapping easier comps in the category now, but it's when I look at our categories and particularly look at the technology categories, I would say the TV category is probably one of the more discretionary categories.

Nick Wells: Yeah, Adrian, it hasn't materially changed. When we started, we are lapping easier comps in the category now, but when I look at our categories and particularly look at the technology categories, I would say the TV category is probably one of the more discretionary categories. That combined with not having seen a lot of innovation in the category, I'd still say it is one of our weaker categories at the moment.

Speaker #1: And so that combined with not having seen a lot of innovation in the category, I'd still say it is one of our weaker categories at the moment.

Speaker #3: you. And can I just ask a question about PCs? Our data suggests that the volumes are down quite materially. So I guess you've got the ASP going off, but going up, but it sounds like the other issues that suppliers are maybe promoting this category less.

Adrian Lemme: Okay. Thank you. Can I just ask a question about PCs? Our data suggests that volumes are down quite materially. I guess you've got the ASP going up and it sounds like the other issue is that suppliers are maybe promoting this category less, so that's also impacting sales. Can you sort of talk to those dynamics please?

Speaker #3: So that's also impacting sales. Can you sort of talk to those dynamics, please?

Speaker #1: Yeah. If you look out over an extended period of time, and we're talking over the last six months, we have seen very material price increases in PCs.

Nick Wells: Yeah. If you look out over an extended period of time, and we are talking about out of over the last six months, we have seen very material price increases in PCs. In some brands that can be in excess of 50% price rises. As we talked about previously, the major driver of that is the increases in cost of memory and that is the demand for hardware used in the AI data centers is sucking up a lot of the memory supply. So memory prices have increased significantly and that is driving costs higher for suppliers and making PC prices higher. We are definitely not seeing ASP increases up at those levels as we are talking about. So the price rises are flowing through and some customers are willing to pay more.

Speaker #1: In some brands, that can be in excess of 50% price rises. And as we talked about previously, the major driver of that is the increases in cost of memory and that is the demand for hardware used in the AI data centers is sucking up a lot of the memory supply.

Speaker #1: So memory prices have increased significantly, and that is driving costs high for suppliers and making PC prices higher. We're not, we're definitely not seeing ASP increases up at those levels as we're talking about.

Speaker #1: So we are the price rises are flowing through, and some customers are willing to pay more that there might be a gaming PC customer, and they're willing to pay more for the higher spec model.

Nick Wells: There might be a Gaming PC customer and they are willing to pay more for the higher spec model, whereas a lot of customers are trading down and trying to stick to their price points. In terms of what we are seeing impact on demand, to date, it has been okay. Units, just for context, for the full year across PC and Apple, we are in unit growth. So we have got some ASP growth and unit growth as well in the category. But it can be lumpy when price rises go through. Obviously, prices are established as new price, and then it impacts promotional activity post those prices. Also suppliers are dealing with significant cost increases, and so they are trying to maintain their profitability in those categories as well. So overall, it is washing through. The other challenge we call out is availability. It does because supply is tight.

Speaker #1: Whereas a lot of customers are trading down and trying to stick to their price points. In terms of what we're seeing impact on demand, to date, it has been okay.

Speaker #1: Units, just for context, for the full year across PC and Apple, we're in unit growth. So we've got some ASP growth and unit growth as well in the category.

Nick Wells: We have got some ASP growth and unit growth as well in the category. It can be lumpy when price rises go through. Obviously, prices are established as new price, and then it impacts promotional activity post those prices. Also suppliers are dealing with significant cost increases, and so they are trying to maintain their profitability in those categories as well. So overall, it is washing through. The other challenge we call out is availability. It does because supply is tight.

Speaker #1: But it is, it can be lumpy when price rises go through. Obviously, prices are established at new price, and then it impacts promotional activity post those prices.

Speaker #1: And also, suppliers are dealing with significant cost increases. And so they're trying to maintain their profitability in those categories as well. So overall, it's washing through.

Speaker #1: The other challenge we call out is availability. It does because supply is tight. That is the key reason why a lot of the a lot of the time, there may not be as long or as deep a promotion as there has been in prior years.

Nick Wells: That is the key reason why a lot of the time there may not be as long or as deep a promotion as there has been in prior years. So all of that is coming together. You would expect it to wash through over the coming six months. It is an unusual phenomenon for us to have significant price rises in the technology category, and it is just a short-term impact that will flow through and be resolved hopefully over the next six months.

Speaker #1: So all of that is coming together. You'd expect it to wash through over the coming six months. It is an unusual phenomenon for us to have significant price rises in the technology category, and it is just a short-term impact that will flow through and be resolved, hopefully, over the next six months.

Speaker #3: Understood. Thank you, Nick.

Adrian Lemme: Understood. Thank you, Nick.

Speaker #2: Your next question comes from Michael Simitas with Jefferies.

Operator: Your next question comes from Michael Simotas with Jefferies.

Speaker #3: Good morning, Nick and David. First question from me is on costs. JB's always done a good job of managing CODB. That continued in the second half, but CODB did grow faster than sales.

Michael Simotas: Good morning, Nick and David. First question from me is on costs. JB's always done a good job of managing CODB. That continued in the H2, but CODB did grow faster than sales. To what extent can you control costs if sales remain tough? Is there any way that you can continue to match your cost growth to sales, or should we expect some operating deleverage if sales remain where they are?

Speaker #3: To what extent can you control costs if sales remain tough? Is there any way that you can continue to match your cost growth to sales, or should we expect some operating deleverage of sales remain where they are?

Speaker #4: Thanks, Michael. Yeah, I'll take this one. So I'll step through FY '26, and you kind of mentioned the numbers there, but just to give you context for how we're thinking about it for FY '27.

David Giansalvo: Thanks, Michael. I will take this one. I will step through FY26, and you kind of mentioned the numbers there, but just to give you context for how we are thinking about it for FY27. For FY26, we had some Fair Work increase and a super increase. We manage our wages as a percentage of sales. We forecast sales each month, and then we roster up and down accordingly. Depending on the time of year and the brand, we have always got a good mix of casuals in our business, approximately 25%, and that enables some flexibility. As you mentioned, you can see that coming through in the numbers in FY26 when we had stronger sales growth in the H1. We reinvested with CODB broadly in line with sales.

Dave Giansalvo: Thanks, Michael. I will take this one. I will step through FY26, and you kind of mentioned the numbers there, but just to give you context for how we are thinking about it for FY27. For FY26, we had some Fair Work increase and a super increase. We manage our wages as a percentage of sales. We forecast sales each month, and then we roster up and down accordingly. Depending on the time of year and the brand, we have always got a good mix of casuals in our business, approximately 25%, and that enables some flexibility. As you mentioned, you can see that coming through in the numbers in FY26 when we had stronger sales growth in the H1. We reinvested with CODB broadly in line with sales.

Speaker #4: So for FY '26, we had some fair work increase and a super increase. And then obviously, we manage our wages as a percentage of sales, we forecast sales each month, and then we roster up and down accordingly.

Speaker #4: Depending on the type of time of year and the brand, we've always got a good mix of casuals in our business, approximately 25%, and that enables some flexibility.

Speaker #4: numbers in FY '26 when we had stronger sales growth in the first half, we reinvested with CODB, broadly in line with sales, but then in the second half, you could see that CODB came back down to 2.6% in JB Hi-Fi Australia, and also 2.6% in the good guys as those sales came down.

David Giansalvo: In the H2, you could see that CODB came back down to 2.6% in JB Hi-Fi Australia and also 2.6% in The Good Guys as those sales came down. The team did a fantastic job of managing that cost base in that more uncertain environment whilst also maintaining conversion in store. When you look forward to 2027 and there is a Fair Work increase of 4.75%, we will continue that practice whilst being very focused on ensuring we do not compromise our in-store service, which is a critical part of our model. To your point on trying to manage it at or below those levels, we will look at productivity benefits. Some of those are more efficient data-led rostering. You heard Nick call out the ESL rollout.

Dave Giansalvo: In the H2, you could see that CODB came back down to 2.6% in JB Hi-Fi Australia and also 2.6% in The Good Guys as those sales came down. The team did a fantastic job of managing that cost base in that more uncertain environment whilst also maintaining conversion in store. When you look forward to 2027 and there is a Fair Work increase of 4.75%, we will continue that practice whilst being very focused on ensuring we do not compromise our in-store service, which is a critical part of our model.

Speaker #4: The 10 did a fantastic job of managing that cost base. In that more uncertain environment, whilst also maintaining conversion in-store. So when you look forward to '27, and there's a fair work increase of 4.75%, we'll continue that practice.

Speaker #4: Whilst being very focused on ensuring we don't compromise our in-store service, which is a critical part of our model. And then to your point on trying to manage it at or below those levels, we'll look at productivity benefits.

Dave Giansalvo: To your point on trying to manage it at or below those levels, we will look at productivity benefits. Some of those are more efficient data-led rostering. You heard Nick call out the ESL rollout. This will enable us to save or reinvest in labor hours that would have otherwise been spent ticketing. There's no doubt it becomes more difficult in the current environment, but we have the system structures and low-cost culture in place to help manage it.

Speaker #4: Some of those are more efficient data-led rostering, and you heard Nick call out the ESL rollout. This will enable us to save or reinvest in labor hours that would have otherwise been spent ticketing.

David Giansalvo: This will enable us to save or reinvest in labor hours that would have otherwise been spent ticketing. There's no doubt it becomes more difficult in the current environment, but we have the system structures and low-cost culture in place to help manage it.

Speaker #4: So there's no doubt it becomes more difficult in the current environment, but we have the system structures and low-cost culture in place to help manage it.

Speaker #1: And I'll just jump on what David's saying as well. I think we have the flexibility we had to do it, but I will emphasize we're always going to take a long-term view and make sure we remain really focused on customer service.

Nick Wells: I will just jump on what Dave was saying as well. I think we have the flexibility to be able to do it, but I will emphasize, we're always going to take a long-term view and make sure we remain really focused on customer service and really making sure that we just maintain our focus on our customer. We definitely have the flex to do it, but we will take a long-term view to make sure we maximize the opportunity that's there and available for us when our customers are in our stores and continue to differentiate on that service and advice, which is absolutely what stands us apart from our competitors.

Speaker #1: And really making sure that we just maintain our focus on our customer. So we definitely have the flex to do it, but we will take a long-term view to make sure we maximize the opportunity that's there and available for us when our customers are in our store and continue to differentiate on that service and advice, which is absolutely what stands us apart from our competitors.

Speaker #3: Thanks. Would it be possible for CODB in JB Hi-Fi Australia and the good guys to decline year on year if top-line trends remain tough, or would that be too much to ask given the underlying inflation?

Michael Simotas: Thanks. Would it be possible for CODB in JB Hi-Fi Australia and The Good Guys to decline year-on-year if top-line trends remain tough, or would that be too much to ask given the underlying inflation?

Speaker #1: It is always, it is possible. It is possible, but it isn't something that we would be looking to do. I think it would absolutely risk service.

Nick Wells: It is possible. It is possible, but it isn't something that we would be looking to do.

Michael Simotas: Thank you.

Nick Wells: I think it would absolutely risk service.

Speaker #3: Yep. Thank you.

Michael Simotas: Yep. No, thank you.

Speaker #2: Your next question comes from Tom Carrath with Barron Joey.

Operator: Your next question comes from Tom Kierath with Barrenjoey.

Speaker #5: Oh, morning, guys. Just on the good guys margin in the second half, the gross margin, can you maybe just give us a bit more color on what's happening there and whether there's any kind of you're buying stock early and then there's a price rise and there's some sort of kind of benefit that happens later there.

Tom Kierath: Morning, guys. Just on The Good Guys margin in the H2, the gross margin, can you maybe just give us a bit more color on what is happening there and whether there is any kind of, you are buying stock early and then with the price rise and there is some sort of kind of benefit that happens later there? It just looked a bit, I mean, it rose quite a lot in the H2.

Speaker #5: It just looked a bit, yeah, I mean, it rose quite a lot in the second half.

Speaker #1: Yeah, it's not, there's not really it's not price rise driven because it's that's more in the tech categories, which is less important for good guys.

Nick Wells: Well, it is not price rise driven because that is more in the tech categories, which is less important for The Good Guys. There is definitely mix helping in it as we are mixing into those larger home appliance categories where they are typically higher gross margin. So that is helping. Then it is a tough market in the home appliance market and we are delivering pretty solid growth and we are being rewarded or recognized for our scale in what is a tough market. So I think it is a combination of mix and our scale and working with suppliers to maximize the opportunity.

Speaker #1: It is, there's definitely mix helping. In that, as we're mixing into those larger home appliance categories where they are typically higher gross margins. So that is helping.

Speaker #1: And then we are, it is a tough market in the home appliance market, and we're delivering pretty solid growth. And we are being rewarded or recognized for our scale in what is a tough market.

Speaker #1: So I think it's a combination of mix and then our scale and working with suppliers to maximize the opportunity.

Speaker #5: Thanks. And then just broadly, there have been some competitors kind of entering the categories, Bunnings is coming into white goods and office works is kind of having another go with laptops.

Tom Kierath: Thanks. Then just broadly, there have been some competitors kind of entering the categories. Bunnings is coming into white goods and Officeworks is having another go with laptops. Have you noticed, I guess, a more competitive pricing environment and your pricing gaps kind of narrow a bit as other players start coming in?

Speaker #5: Have you noticed I guess a more competitive pricing environment and your pricing gaps kind of narrow a bit as other players start kind of coming in?

Speaker #1: Look, we would say, as I called out, it's competitive, but we're used to dealing with competition. And I think we're managing it well with if you look back over the years, Tom, you know as well, we've seen a number of different competitors come and go.

Nick Wells: Look, as I called out, it is competitive, but we are used to dealing with competition and I think we are managing it well. If you look back over the years, Tom, you know as well, we have seen a number of different competitors come and go and we will expect that to continue. So as we always have, we will make sure we stay focused on the customer and we will just continue to make sure we are known for value. We will leverage our scale with suppliers to make sure we get the best possible pricing for our customers. We will differentiate on service. All those things that have held us in good stead over the years will continue to hold us in good stead in an evolving competitive market. But like I say, I think, if you look over a number of years, there has always been competitors and we are sure that is going to continue.

Speaker #1: And we'll expect that to continue. So as we always have, we'll just we'll make sure we stay focused on the customer and we'll just continue to make sure we're known for value.

Speaker #1: We'll leverage our scale with suppliers to make sure we get the best possible pricing for our customers. We'll differentiate on service. All those things that have helped us in good stead over the years will continue to hold us in good stead in an evolving competitive market.

Nick Wells: We will leverage our scale with suppliers to make sure we get the best possible pricing for our customers. We will differentiate on service. All those things that have held us in good stead over the years will continue to hold us in good stead in an evolving competitive market. But like I say, I think, if you look over a number of years, there has always been competitors and we are sure that is going to continue.

Speaker #1: But like I say, I think if you look over a number of years, there's always been competitors and we're sure that that's going to continue.

Speaker #5: Yep. Great. Thanks, Nick.

Ben Gilbert: Yeah. Great. Thanks, Nick.

Speaker #2: Your next question comes from Brian Raymond with JP Morgan.

Operator: Your next question comes from Bryan Raymond with JP Morgan.

Operator: Your next question comes from Bryan Raymond with JPMorgan.

Speaker #6: Morning, Nick and David. Just on continuing on this theme around availability and promotional activity post-price rises, I agree July is not something we should be focused too much on given the size of that month.

Bryan Raymond: Morning, Nick and David. Just on continuing on this theme around availability and promotional activity post-price rises. I agree July is not something we should be focused too much on given the size of that month, but you've got some big events coming up in Q2, obviously Black Friday and Boxing Day. I'd just be interested in your thoughts around whether the supply base is starting to. Sorry, whether that supply base will be less promotional at those major events or do you think they're keeping their powder dry at this stage in order to hold that back for those key events?

Speaker #6: But you've got some big events coming up in two Q, obviously Black Friday and Boxing Day. I'd just be interested in your thoughts around whether the supply base is starting to sorry, whether that supply base will be less promotional at those major events, or do you think they're keeping their powder dry at for those key events?

Speaker #1: No, at this stage, we think we're very optimistic on those big promotional events. Like I say, we can absolutely see customers looking for those key promotional periods and we think that Q2 promotional period will be very significant.

Nick Wells: No, at this stage we're very optimistic on those big promotional events. Like I say, we can absolutely see customers are looking for those key promotional periods and we think that Q2 promotional period will be very significant and I think suppliers are lining up behind it as well. No, we're still very optimistic for those Q2 promotional events.

Speaker #1: And I think suppliers are lining up behind us as well. So no, we're still very optimistic for those Q2 promotional events.

Speaker #6: And you don't think availability will be a challenge there given that has been a challenge of late?

Bryan Raymond: You don't think availability will be a challenge there given that has been a challenge of late?

Speaker #1: No, I think we're I think we're close to getting through the bulk of the availability challenges.

Nick Wells: No, I think we're close to getting through the bulk of the availability challenges.

Speaker #6: Okay. Great. And then just continuing on the theme around gross margins, just the JB's 2H gross margin down 25 bits year on year. I assume mix played a role there, but given Apple was in short supply, I thought that might have helped it a little bit.

Bryan Raymond: Okay, great. Just continuing on the theme around gross margins, the JB's H2 gross margin down 25 basis points year on year. I assume mix played a role there, but given Apple was in short supply, I thought that might have helped it a little bit. Was it mainly price matching peers with those slower inventory turns or are there other factors at play in that H2?

Speaker #6: Was it mainly price matching peers with those slower inventory turns, or is there other factors at play in that second half?

Nick Wells: Well for a start, I'd say it is 21.93% in the H2, so it's a little bit under our 22%, but it's cycling at probably an elevated gross profit position in the H2 last year. The stock positioning is having some impact in that H2. So it's like I said earlier, the fact that we have a leaner stock position and have more of the stock at the higher price compared to some of our competitors who can hold price lower for longer as a result. That is having some impact in that signal.

Speaker #1: The one for a start, I'd say it is kind of where the 21.93% in the second half. So it's pretty it's a little bit under our 22%, but it's cycling at probably an elevated gross profit position in the second half last year.

Speaker #1: Yeah, the stock positioning is having some impact in that second half. So it's the yeah, like I said earlier, the fact that we've a leaner stock position and have more of the stock at the higher price compared to some of our competitors who can hold price lower for longer as a result.

Speaker #1: That is having some impact in that segment.

Speaker #6: Okay, great. Thank you.

Bryan Raymond: Okay, great. Thank you.

Speaker #2: Your next question comes from Ben Gilbert with Jordan.

Operator: Your next question comes from Ben Gilbert with Jarden.

Speaker #7: Hi, morning, guys. So just again, not to reflect too much on July, but just sort of wrapping up what you've both said around July.

Ben Gilbert: How are you guys? Not to focus so much on July, but just sort of wrapping up what you both said around July. So you got the headwinds that you are cycling through from Switch and the quarter a hundred bits from the PCP. You have Samsung a couple of weeks later, which presumably are dragging out availability issues. As we start to move through the rest of the year, those in theory ease, plus you have more promotional periods and you still got this pricing situation coming through. I appreciate you have not been given guidance, but you put all that together and the inference would be that you would expect your comps to move at least flat or positive through the rest of the year. Is that a fair assumption?

Speaker #7: So you've got the headwinds that you're cycling through from Switch, from the quarter 100 bits and the PCP. You've got Samsung a couple of weeks later, which presumably they're dragging out availability issues.

Speaker #7: As we start to move through the rest of the year, those in Series E's plus you've got more promotional periods and you've still got this pricing situation coming through.

Speaker #7: I appreciate having given guidance, but you put all that together and the influence would be that you're speaking comps to move at least flat or positive through the rest of the year.

Ben Gilbert: I appreciate you have not been given guidance, but you put all that together and the inference would be that you would expect your comps to move at least flat or positive through the rest of the year. Is that a fair assumption? I am just trying to put a lot of what the puts and takes you sort of talked around July through because it feels like a lot of those headwinds should start to ease. If anything, we start getting some tailwinds and some GTA, et cetera, in there as well.

Speaker #7: Is that a fair assumption? I'm just trying to put a lot of what to put some tags you sort of talked around July through because it feels like a lot of those headwinds should start to ease.

Ben Gilbert: I am just trying to put a lot of what the puts and takes you sort of talked around July through because it feels like a lot of those headwinds should start to ease. If anything, we start getting some tailwinds and some GTA, et cetera, in there as well.

Speaker #7: And if anything, we're start getting some tailwinds and then shut GTA, etc., in there as well.

Speaker #1: Yeah, look, I think that's right. We look at it and go, July is one month and there is some unique factors in July. Our business well, we don't enjoy recording negative comps and we'll be absolutely driving to get back to positive sales growth.

Nick Wells: Yeah, look, I think that is right. We look at it and go, July is one month and there are some unique factors in July. You know our business well, we do not enjoy recording negative comps and we will be absolutely driving to get back to positive sales growth. I think Q1 is hard to see. You would expect momentum to improve into Q2 and as you enter that key promotional period. Yes, there is some product release coming in Q2 which would be helpful with Grand Theft Auto VI and you would expect Apple will have a release in Q2 as well on phone. There are some good products coming through. Then we get to start to cycle easier comps into the H2. Yes, there are some shorter-term headwinds at the moment, but we would expect it to improve over the course of the year.

Speaker #1: I think, yeah, I think Q1, it's hard to see you'd expect momentum to improve into Q2 and it's a more as you enter that key promotional period, yes, there is some product release.

Speaker #1: Coming in Q2, which would be helpful with GTA 6 and you would expect Apple will have a release in Q2 as well on phones.

Speaker #1: So it's a good product coming through. And then we get to start to cycle easier comps into the second half. So yes, there is some shorter-term headwinds at the moment, but we would expect it to improve over the course of the year.

Speaker #7: Perfect. Just one from me, the telco, I think it should be this category now, at least in JB's. You could just remind us, I think your contracts up next year there's obviously a bit more competition coming from Amazon and Harvey's at the moment.

Ben Gilbert: The second one from me. Telco is currently the biggest category now, at least in JB's. Could you just remind us, I think your contract is up next year. There is obviously a bit more competition coming in from the likes of Amazon and Harvey's at the moment. How do you think about continuing to maintain that growth in telco? Is there a scenario where you would just split the contract across multiple providers or bring in another player in that will allow you to switch and buy some of that opportunity with the telco category? I am just trying to think about how you see that as opportunity for growth over the next 12 to 24 months as well.

Speaker #7: How do you think about sort of continuing to maintain that growth in telco? Is there a scenario we look to split the contract across multiple providers or bring in another sort of player in that will allow you to sort of switch and buy some of that opportunity with the telco category?

Speaker #7: I'm just trying to think about how you see that as sort of opportunity for growth over the next sort of 12, 24 months as well.

Speaker #1: No, we're still really confident in the growth outlook in that telco category. I think when you look when we talk telco, there's two bases.

Nick Wells: We are still really confident in the growth outlook in that telco category. I think when we talk telco, there are two bases. There is the hardware, so selling the handsets, and then there are the services with our partnership with Telstra. On the hardware side, we would still say that the telco hardware, whilst it is our biggest category, it is still one of our lowest share categories. So we still think there are opportunities to grow sales in the hardware side. Then on the service side, we have a very strong partnership with Telstra, and we remain really confident in that.

Speaker #1: There's the hardware, so the selling the handsets and then there's the services when that partnership with Telstra. On the hardware side, we'd still say that telco is the telco hardware is one of our last it's our biggest category.

Speaker #1: It's still one of our lowest share categories. So we still think there's opportunities to grow sales in the hardware side and then on the service side, we have a very strong partnership with Telstra and we're made really confident in that.

Speaker #7: Okay. Fantastic. Perfect.

Ben Gilbert: Okay. Fantastic. Thanks, Nick.

Speaker #2: Your next question comes from Caleb Wheatley with Macquarie.

Operator: Your next question comes from Caleb Wheatley with Macquarie.

Speaker #8: Morning, Nick. And David. Just to sort of explore this stock availability issue a bit more. We could. This came through understanding exactly what categories they were.

Caleb Wheatley: Morning, Nick and David. Just keen to sort of explore this stock availability issue a bit more if we could. Just keen to understand exactly what categories they were. Do you feel that you've been outwardly impacted because of the stock turn that you mentioned a bit earlier. Then you did say there was signs of easing. Just wondering what sort of line of sight was on clearing that stock availability issue, please.

Speaker #8: Do you feel that you've been outwardly impacted because of the stock turn that you mentioned a bit earlier? And then you did say there was signs of easing.

Speaker #8: Just wondering what sort of line of sight was on clearing that stock availability issue, please.

Speaker #1: Yeah, well, the conversation look, it's been very focused on computers, but when we talk availability, it probably should acknowledge there has been categories like gaming where we've seen availability challenges as well.

Nick Wells: Well, the conversation has been very focused on computers, but when we talk availability, I probably should acknowledge there has been categories like gaming where we've seen availability challenges as well. So, in products like PlayStation and Switch, we have had real availability challenges and we are hopeful they will start to improve over the coming months. On the other categories, and I think you would have heard it from Apple, they've seen strong demand for their products globally, and as a result, they've had availability challenges in some of their products as well. So it's brands like Apple, it's gaming, it's some of the PC brands. Like I said earlier, they are improving now and coming into Q2, we've been pretty optimistic that most of that is through. Similarly, with the differentials on pricing, the significant price increases have come through.

Speaker #1: So in product like PlayStation and Switch, we have had real availability challenges. And we are hopeful they will start to improve over the coming months.

Speaker #1: On the other categories, and I think you would have heard it from Apple, they've seen strong demand for their products globally and as a result, they've had availability challenges in some of their products as well.

Speaker #1: So it's brands like Apple, it's gaming, it's some of the PC brands. But like I said earlier, they are improving now. And coming into Q2, we've been pretty optimistic that most of that's through.

Nick Wells: It's brands like Apple, it's gaming, it's some of the PC brands. Like I said earlier, they are improving now and coming into Q2, we've been pretty optimistic that most of that is through. Similarly, with the differentials on pricing, the significant price increases have come through. We don't know if they're completely done in computers. There might still be some price rises to come in computers, but not to the same extent as what we've seen over the last six months.

Speaker #1: And similarly, with the differentials on pricing, the significant price increases have come through. We don't know if they're completely done in computers. There might still be some price rises to come in computers, but not to the same extent as what we've seen over the last six months.

Nick Wells: We don't know if they're completely done in computers. There might still be some price rises to come in computers, but not to the same extent as what we've seen over the last six months.

Speaker #8: Okay. But it sounds like the difference is there that it's a market-wide kind of availability issue and so because you've sort of sold through a more quickly, you're sort of wearing that headwind earlier.

Caleb Wheatley: Okay. But it sounds like the inference is there that it is a market-wide kind of availability issue. Because you have sold through more quickly, you are wearing that headwind earlier. Is that fair?

Caleb Wheatley: Okay. It sounds like the inference is there that it is a market-wide kind of availability issue. Because you have sold through more quickly, you are wearing that headwind earlier. Is that fair?

Speaker #8: Is that fair?

Speaker #1: Yeah, that's fair. Yeah, that's fair. Yeah.

Nick Wells: Yeah, that is fair.

Speaker #8: Okay. Great. And then thank you. Just my second question, just on E&S, appreciate that you've called out sort of reinvestment in the offering there.

Caleb Wheatley: Okay, great. Thank you. My second question, just on E&S. Appreciate that you have called out reinvestment in the offering there. It does seem like earnings are now negative for the time being. Just, yeah, keen to get your thoughts on the pathway from here, where the reinvestment is really going, and how we should think about the turnaround on that front.

Speaker #8: Does seem like, of course, earnings are now negative for the time being. Just, yeah, sort of keen to get your thoughts on the pathway from here, where the reinvestments really going.

Speaker #8: And how we should think about sort of the turnaround on that front.

Speaker #1: Yeah, to your point, we don't like losing money and it was disappointing to drop into loss-making in that financial year. We're confident we can get it back into positive earnings quite quickly.

Nick Wells: Yeah. Look, yes, to your point, we do not like losing money, and it was disappointing to drop into loss-making in that financial year. We are confident we can get it back into positive earnings quite quickly. What I tried to call out through this Q&A and the focus here is we are putting some cost into the business, which is writing sales revenue at the moment, but they are not converting into delivered sales until the projects are completed. So we have got the cost at the moment ahead of the revenue, and then we have some initiatives which we are investing in systems and websites and things as well. So some one-off costs. Yeah, really confident that we are making the right decisions and making the right investments in E&S.

Speaker #1: What I tried to call it out in the through the sort of Q&A and the focus areas, we're putting some cost into the business, which is writing sales revenue at the moment, but they're not converting into delivered sales until the project is completed.

Speaker #1: So we've got the cost at the moment ahead of the revenue. And then we have some initiatives with sort of investing in systems and websites and things as well.

Speaker #1: So some one-off costs. So yeah, really confident that we're making the right decisions and making the right investments in E&S. But probably expect the market to remain subdued for the next sort of period in E&S, given it is more that renovation and construction market.

Nick Wells: Some one-off costs. Yeah, really confident that we are making the right decisions and making the right investments in E&S. I probably expect the market to remain subdued for the next period in E&S, given it is more that renovation and construction market. So I think the market will remain a bit tougher, but definitely we think we can continue to improve our performance.

Nick Wells: But I probably expect the market to remain subdued for the next period in E&S, given it is more that renovation and construction market. So I think the market will remain a bit tougher, but definitely we think we can continue to improve our performance.

Speaker #1: So I think the market will remain a bit tougher, but definitely we think we can continue to improve our performance.

Speaker #8: And Caleb, I'll give you the example of investing in commercial heads as an example. You put the heads in today and they write written business, but that business might not be delivered for sort of 12 to 18 months.

David Giansalvo: And Caleb, I will give you the example of investing in commercial heads as an example. You put the heads in today and they write written business, but that business might not be delivered for 12 to 18 months. So you do not get the benefit of that flowing through to the sales and the earnings for 12 or 18 months' time. And that is that sort of position that we are in at the moment that you saw in FY26.

Dave Giansalvo: And Caleb, I will give you the example of investing in commercial heads as an example. You put the heads in today and they write written business, but that business might not be delivered for 12 to 18 months. So you do not get the benefit of that flowing through to the sales and the earnings for 12 or 18 months' time. And that is that sort of position that we are in at the moment that you saw in FY26.

Speaker #8: So you don't get the benefit of that flowing through to the sales and the earnings, but for 12 or 18 months' time. And that's that sort of position that we're in at the moment that you saw in FY26.

Speaker #8: Okay. That's helpful. Thanks, Nick and David.

Caleb Wheatley: Okay. That is helpful. Thanks, Nick and David.

Speaker #2: Your next question comes from Peter Marks with Goldman Sachs.

Operator: Your next question comes from Peter Marks with Goldman Sachs.

Speaker #9: Oh, morning, guys. Can I just check when were the worst impacts from the shortages? JB's Australia?

Peter Marks: Morning, guys. Can I just check, when were the worst impacts from the shortages in JB Hi-Fi Australia?

Speaker #1: It depends on the category. So it's for example, in July, we have gaming console shortages. With Nintendo Switch. So it literally depends on the supplier and the category.

Nick Wells: It depends on the category. For example, in July, we had gaming console shortages with Nintendo Switch. It literally depends on the supplier and the category. I am not going to run through every single one, but it is through Q4 and into July. Q3 was fine.

Speaker #1: So I'm not going to run through every single one, but it's through Q4 and into July. Q3 was fine.

Speaker #9: That's helpful. And then just in the inflationary categories, do you think they're signs that the suppliers are prioritizing the margin more premium products and they're sort of neglecting the more entry-level products?

Peter Marks: That is helpful. Then just in the inflationary categories, do you think there are signs that the suppliers are prioritizing the margin more premium products and they are sort of neglecting the more entry-level products? Or is that something you are not seeing and the suppliers are sort of adjusting their

Speaker #9: Or is that something you're not seeing in suppliers that sort of adjusting their? Favorite the more value products?

Nick Wells: Yeah

Peter Marks: favorites are more value products?

Speaker #1: No. I think it is the outcome is that is that so we're taking the PC categories. The quantum of the the quantum of the price rises mean that it's difficult to get a PC at some of those really entry-level prices.

Nick Wells: No. I think the outcome is that. If you take in the PC categories, the quantum of the price rises mean that it is difficult to get a PC at some of those really entry-level prices. So you are seeing it in those real low price point products. There is impact there and yes, there is less availability, but it is a real challenge to get a device in at some of those entry price points. So that is absolutely something you are seeing. I do not think it is a deliberate choice to prioritize the higher profit or higher price point products. It is just the reality of what the cost of memory is today.

Speaker #1: So you are seeing it in those real low price point products. There is impact today and yes, there is less availability, but it's kind of really it's a real challenge to get a device in at some of those entry price points.

Speaker #1: So that is absolutely something you're seeing. I don't think it's a deliberate choice to prioritize the higher profit or higher price point products. It's just the reality of what the cost of memory is today.

Speaker #9: Okay. That's very helpful. Thanks, Nick.

Peter Marks: Okay. That is very helpful. Thanks, Nick.

Speaker #2: Your next question comes from Craig Wolford with NST Marking.

Operator: Your next question comes from Craig Woolford with MST Marquee.

Speaker #10: Good morning, Nick and David. Just trying to go just really interesting discussion here, but just trying to gauge the weakness in sales trends, both for the fourth quarter and the July update, if we looked at two-year growth rates.

Craig Woolford: Good morning, Nick and David. It is a really interesting discussion here. Just trying to gauge the weakness in sales trends both for Q4 and the July update, if we looked at two-year growth rates. I am just trying to gauge what you are telling us. Is it more of a supply problem or a demand challenge? If you can, as part of your answer to that, just reflect on how the consumer is responding to price rises, because I think there is quite a lot of mixed changes that you have made to the categories to soften the blow on the consumer.

Speaker #10: I'm just trying to gauge what you're telling us. Is it more of a supply problem or a demand challenge? And if you can as part of your answer to that, just reflect on how the consumers responding to price rises, because I think there's quite a lot of mixed changes that you've made to the categories to soften the blow on the consumer.

Speaker #1: Yeah. Like I said, it's a combination of both. It's a combination of supply challenges and probably a bit of a weaker demand environment. But as we have always maintained, we're just going to stay focused on what we can control and so it's hard for us to infact the broader consumer market.

Nick Wells: Yeah. Look, it is a combination of both. It is a combination of supply challenges and probably a bit of a weaker demand environment. As we have always maintained, we are just going to stay focused on what we can control. It is hard for us to impact the broader consumer market. We will just stay very focused on our categories and our customer. In terms of the supply challenges and what we can see from consumers, like I said, whilst we are seeing significant cost increases from suppliers, we are not seeing ASP increase by the same amount. You can see consumers are making choices about what they are willing to spend on certain products. They are looking like effectively they are trading down by spending a similar amount as they did last year to get a product with less specs than what they would have got the same time last year.

Speaker #1: So we'll just stay very focused on our categories and our customer. In terms of the supply challenges and what we can see in the consumers, like I said, we are whilst we're seeing significant cost increases from suppliers, we are seeing ASP increase by the same amount.

Speaker #1: So you can see consumers are making choices about what they're willing to spend on certain products. And they are willing they are looking like effectively they're trading down by spending a similar amount as they did last year, to get a product with less specs than what they would have got the same time last year.

Speaker #1: So you can see you can see customers making a choice around where they're willing to spend money. At some of the entry products, that is when it's more difficult.

Nick Wells: You can see customers making a choice around where they are willing to spend money. At some of the entry products, that is when it is more difficult, and even in some of the gaming products it is more difficult when there is not obvious substitutions. Like an entry-level tablet, as an example, which might have had a 25% price increase, there is not really an alternative for that. That is impacting demand in some of those categories. Like I was saying to Peter, it is very much every product is different, every category is different, every brand is different. We are just continuing to manage it. The good thing is that we have such strong relationships with our suppliers and we have a broad range of product.

Speaker #1: And even in some of the gaming products, it's more difficult. When there's not obvious substitutions, so like an entry-level tablet as an example, which might have had a 25% price increase, there's not really an alternative for that.

Speaker #1: So that is impacting demand. In some of those categories, and like I was saying, to Peter, it's kind of it's very much every product's different, every category is different, every brand's different.

Nick Wells: That is impacting demand in some of those categories. Like I was saying to Peter, it is very much every product is different, every category is different, every brand is different. We are just continuing to manage it. The good thing is that we have such strong relationships with our suppliers and we have a broad range of product. We are managing to get multiple offers out there to customers and are offsetting some of the challenges we are seeing with availability and some of the challenges we are seeing with changes to promotional frequency.

Speaker #1: And we're just continuing to manage it. The good thing is that we have such strong relationships with our suppliers and we have a broad range of product.

Speaker #1: We are managing to get multiple offers out there to customers and are offsetting some of the challenges we are seeing with availability and some of the challenges we're seeing with changes to promotional frequency.

Nick Wells: We are managing to get multiple offers out there to customers and are offsetting some of the challenges we are seeing with availability and some of the challenges we are seeing with changes to promotional frequency.

Speaker #10: Yeah. That's very helpful. The other topic that's been interesting is just around not compromising on customer service. Of course, you want to manage the P&L, but also customer service.

Craig Woolford: That is very helpful. The other topic that has been interesting is just around not compromising on customer service. Of course, you want to manage the P&L, but also customer service. Can you just share what is the measure of customer service you use? What metric and how does that get judged month to month?

Speaker #10: So can you just share what is the measure of customer service you use? What metric and how does that get judged month to month?

Speaker #1: Yeah. So we do as you would expect, we have measures of sort of NPS internally that we track. But probably the two simplest metrics would be conversion so we know what customers are coming to our store and if we're reducing hours on the shop floor, if we were impacting service, you would expect to see conversion go down and we're definitely not seeing that.

Nick Wells: Yeah. As you would expect, we have measures of NPS internally that we track. But probably the 2 simplest metrics would be conversion. So we know what customers are coming to our store and if we're reducing hours on the shop floor, if we were impacting service, you would expect to see conversion go down, and we're definitely not seeing that. And then ultimately, sales. We've always said we're a very sales-focused organization. So, if we start to see sales at store level impacted, then we would reconsider our labor allocation.

Speaker #1: And then ultimately, sales. And we've always said we're very sales-focused organization. So if we start to see sales at store level impacted, then we would reconsider our labor allocation.

Speaker #10: Yeah. We often see companies manage wage to sales that makes a lot of sense. But when you've got wage inflation of like 4.75%, if your comps are flat, you have to drop hours.

Craig Woolford: Yeah. We often see companies manage wage to sales. It makes a lot of sense. But when you've got wage inflation of like 4.75%, if your comps are flat, you have to drop hours. So I'm just trying to wrestle with the higher wage.

Speaker #10: So just trying to wrestle with the higher wage.

Speaker #1: Yeah. It's where you drop the hours, I think, is the important thing. So that's when Dave was trying as Dave was talking out, like we're very focused on productivity and we definitely don't want to impact customer-facing hours.

Nick Wells: Yeah. It's where you drop the hours, I think is the important thing. As Dave was talking about, we're very focused on productivity and we definitely don't want to impact customer-facing hours. So, it's making back-of-house processes more efficient. It's things like those electronic shelf labels that we talked about. In a competitive environment, prices are moving consistently and with printed tickets or handwritten tickets, our team members are spending a lot of time adjusting price rather than serving customers. So an initiative like electronic shelf labels will free up a lot of time to make sure that we can keep that labor on the shop floor and focused on serving customers.

Speaker #1: So it's making back-of-house processes more efficient. It's things like those electronic shelf labels that we talked about. In a competitive environment, prices are moving consistently.

Speaker #1: And with printed tickets or handwritten tickets, our team members are spending a lot of time adjusting price rather than serving customers. So in an initiative like electronic shelf labels, we'll free up a lot of time to make sure that we can keep that labor on the shop floor and focused on serving customers.

Speaker #10: Right. Thanks, Nick.

Craig Woolford: Thanks, Nick.

Speaker #2: Your next question comes from Phil Kimber with E&P Capital.

Operator: Your next question comes from Phil Kimber with E&P Capital.

Speaker #11: Hey, Nick and David. Just one for me. On the commercial business, I know you talked about it from an E&S perspective, but maybe just a little bit more color in what you're seeing in terms of sort of contracts and whether the pipeline is still there, but in the future it looks like it's falling away or just not sure what sort of color you can sort of give us there.

Phil Kimber: Hey, Nick and David, just one for me. On the commercial business, I know you talked about it from an E&S perspective, but maybe just a little bit more color in what you are seeing in terms of contracts and whether the pipeline is still there, but in the future it looks like it is falling away. I am just not sure what sort of color you can give us there and any sort of commentary by states. Are there certain states that are particularly tough in that part of the market? Thanks.

Speaker #11: And any sort of commentary by states, are there certain states that are particularly tough in that part of the market? Thanks.

Speaker #1: Yeah. So in the real sort of bulk commercial area, that is where E&S is placed relative to good guys and JB. JB, if you think JB, we have got JB Business and JB Education and they are more focused on sort of small to medium business and education customers and then good guys probably more talking to a trade customer in good guys.

Nick Wells: Yeah. So in the real sort of bulk commercial area, that is where E&S plays relative to The Good Guys and JB. We have got JB Business and JB Education, and they are more focused on sort of small to medium business and education customers. The Good Guys, probably is more talking to a trade customer in The Good Guys. Whereas E&S does have that exposure to developers and commercial builders. It has been weaker in Victoria, as you would expect, and given that is where E&S is predominantly based today, that is having an impact in E&S. But at the same time, it is still a pretty small business, and we have got a great opportunity to grow share in that. So even if the market does remain a bit softer in sort of developments, we still think we can see really strong growth in E&S in that space.

Speaker #1: Whereas E&S does have that exposure to developers and commercial builders. It has been weaker in Victoria as you'd expect and given that is where E&S is predominantly based today, that is having an impact in E&S.

Speaker #1: But at the same time, we're still it's still a pretty small business and we've got a great opportunity to grow share in that. So even if the market does remain a bit softer in sort of developments, we still think we can see really strong growth in E&S in that space.

Speaker #11: Thanks. But in the business and education part of the JB Hi-Fi business, are you seeing any changes there or that's pretty stable?

Phil Kimber: Thanks. But in the business and education part of the JB Hi-Fi business, are you seeing any changes there or that is pretty stable?

Speaker #1: It's pretty stable. We had a solid year in JB Business. It's similar in that the price increase has also impact business customers and education customers.

Nick Wells: It is pretty stable. We had a solid year in JB Business. It is similar in that the price increases also impact business customers and education customers, so we continue just to manage that. But it tends to be more correlated with retail than the E&S, which is definitely more driven by development and construction.

Speaker #1: So we continue just to manage that. But it tends to be more color related with retail than E&S, which is definitely more driven by development and construction.

Speaker #11: Right. Thanks, Nick.

Phil Kimber: Great. Thanks, Nick.

Speaker #2: Your next question comes from Shawnee Ratnapala with Bell Potter Securities.

Operator: Your next question comes from Chami Ratnapala with Bell Potter Securities.

Speaker #12: Hi team. Hi Nick. And Dave. Maybe one or two questions from me quickly with the time remaining. Just with the core customer could you quickly sort of talk to what are the obvious differences between the JB Hi-Fi business and good guys at the moment in the core customer?

Chami Ratnapala: Hi, team. Hi, Nick, and Dave. Maybe one or two questions from me quickly with the time remaining. Just with the core customer, could you quickly sort of talk to what are the obvious differences between the JB Hi-Fi business and The Good Guys at the moment in the core customer?

Nick Wells: The main difference we are seeing in a customer?

Speaker #1: The main difference is saying in the customer?

Speaker #12: Yes. In the fourth quarter, like weakness-wise, how different have they been?

Chami Ratnapala: Yes. In Q4, like weakness-wise, how different have they been?

Speaker #1: Look, I think the key for us is like I was sort of talking about at the start with how our brands are positioned differently.

Nick Wells: Look, I think the key for us is like I was sort of talking about at the start with how our brands are positioned differently. The key difference we see is in the categories. So The Good Guys, very home appliance-focused. We have seen sort of tougher home appliance categories in that Q4, and The Good Guys, whilst flat in that market, did take share. JB is definitely more about those technology categories. We have spoken at length about some of the changes we have seen in those technology categories. I think broadly, we would say consumers are kind of responding to the changes in the categories rather than any broad macro view.

Speaker #1: The key difference we see is in the categories. So good guys in that good guys very home appliance focused we have seen sort of tougher home appliance categories in that Q4 and good guys whilst flat in that market did take share.

Speaker #1: And then JB definitely more about those technology categories and we've probably spoken at length about some of the changes we've seen in those technology categories.

Speaker #1: I think broadly we would say consumers are kind of responding to the changes in the categories rather than the any broad macro view.

Speaker #12: Perfect. Thanks for that. And then just on the growth margin of good guys, I mean, at the current exit rate of the margin, I mean, you spoke to the level of confidence in the JB Hi-Fi business.

Chami Ratnapala: Perfect. Thanks for that. Just on the gross margin of The Good Guys, I mean, at the current exit rate of the margin, I mean, you spoke to the level of confidence in the JB Hi-Fi business. What are the views for FY27 on that gross margin for The Good Guys?

Speaker #12: What's the what are the views for FY27 on that growth margin for good guys?

Speaker #1: Yeah. It's a very strong growth margin result in the good guys, particularly in the second half. It's you've seen it continually increase over the last few years and we've been saying it sort of around that circa 23%.

Nick Wells: Yeah, it is a very strong gross margin result in The Good Guys, particularly in H2. You have seen it continually increase over the last few years, and we have been saying it sort of around that circa 23%. It is now up over 23.5%. As we do in all our businesses, we will try and cycle it. So our goal would be to try and maintain gross margin in The Good Guys.

Speaker #1: It's now up over 23.5%. As we do in all our businesses, we'll try and cycle it. So our goal would be to try and maintain gross margin in good guys.

Speaker #12: Perfect. Thanks for taking my question.

Chami Ratnapala: Perfect. Thanks for taking my questions.

Speaker #2: That does conclude our question and answer session. I'll hand back for any closing remarks.

Operator: That does conclude our question and answer session. I will hand back for any closing remarks.

Operator: That does conclude our question-and-answer session. I will hand back for any closing remarks.

Speaker #1: As always, as I said at the start, thank you for your interest in the business and we will see a number of you on the road over the coming week.

Nick Wells: As always, as I said at the start, thank you for your interest in the business, and we will see a number of you out on the road over the coming week. Thank you.

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