Australia Discretionary Retail

Goldman Sachs initiates coverage of JB Hi-Fi and Harvey Norman with Sell ratings, predicting significant earnings misses due to AI-driven memory price spikes and a cooling Australian housing market.

Key Takeaways

• 1.Goldman Sachs initiates coverage of Australian retailers JB Hi-Fi (JBH) and Harvey Norman (HVN) with Sell ratings due to earnings downside risks.
• 2.Memory spot prices (DRAM/NAND) have surged >7x, leading to 20-30% price increases for computers and smartphones, which is expected to destroy consumer demand.
• 3.JBH faces a specific 'perfect storm' in 4Q26 as it laps the Nintendo Switch 2 launch and faces stock shortages in Apple products.

Table of Contents

• Our Thesis in 9 Key Charts
• JBH Financial Summary
• HVN Financial Summary
• JBH: A perfect storm in 4Q26 and consensus sales growth for FY27 looks too optimistic
• JBH GSe vs. Consensus
• HVN: Furniture looks challenged as well on higher interest rates/shipping cost risk
• HVN GSe vs. Consensus
• JBH and HVN Valuation
• JBH and HVN Valuation Methodology and Risks
• Appendix
• Disclosure Appendix

Document Preview

Page 1 of 5

Subscribe for full accessStart Free Trial