In its Investor Presentation for 2012, JB Hi-Fi claimed that competitors' store closures impacted its margins.
It makes sense. We saw some of it in the closure of, where customers scrambled to grab a bargain before stocks disappeared forever. But when you're shopping from a closing store, that means you're not buying from one that's staying open.
In its 2012 Investor Presentation, JB Hi-Fi revealed that its Consolidated Gross Margin — that is, the rate of profit per product sold — was just 20.9 per cent in the first half of 2011, down from 22 per cent for the 2011 financial year and 21.2 per cent for the first half of the 2012 financial year.
Among the factors to which it attributed this decrease, which included shrinkage levels, competitors chasing market share and its own inability to reach incentive targets, JB Hi-Fi listed "Store closures by competition (ie, WOW Sight & Sound, Dick Smith and GAME) as they cleared stock".
It also noted that in New Zealand, its margin grew year on year.
Overall, its net profit was down for 2012 from AU$109.7 million in 2011 to AU$104.6 million, — but, as that figure was still higher than analyst forecasts, its shares rose this morning, and chief executive Terry Smart is optimistic that the company will continue to grow.
Still, it is interesting to note how the impact of a failing business can make shockwaves across the wider economy.