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Australian entertainment and electronics retailer JB Hi-Fi is expanding further into New Zealand and will take on The Warehouse as a discount CD retailer.
JB Hi-Fi chief executive Richard Uechtritz said the ASX-listed company, which started in Melbourne, floated in 2003 at A$1.55 and closed yesterday at A$10.53.
"We moved into Queensland and New South Wales, and it has been a new brand," said Uechtritz.
"New Zealand will be like those states, and New Zealanders will accept the brand - we think it is pretty good."
JB Hi-Fi bought 11 Hill & Stewart stores in March for $16.2 million and will use them as the base for expanding the younger-focused JB Hi-Fi chain in New Zealand.
So far, only one JB Hi-Fi - centred on entertainment products such as CDs and DVDs - has opened, in Auckland's Queen St. Three more are planned for Manukau City, Lynnmall and Albany by the end of next year.
Another four to five stores are planned for Auckland locations, including Botany Downs and Wairau Park.
JB Hi-Fi entertainment and electronics stores' discount pricing model puts it in the same market as The Warehouse Group, which is the biggest CD retailer in New Zealand.
With a market capitalisation of $620 million, JB Hi-Fi is the biggest seller of CDs in Australia and the second biggest for televisions and electronic games.
In electronics, the company sees its biggest competitors in New Zealand as private-equity-owned Bond & Bond, Woolworths Australia-owned Dick Smith Electronics and Harvey Norman.
Uechtritz said sales in 73 Australian stores were typically around 34 per cent entertainment-based with CDs, DVDs and games. Electronics goods such as televisions and computers make up the majority of sales.
Music industry sources say the Queen St store is already having a significant impact on the city's retail music sales.
Initially, JB Hi-Fi will focus on Auckland.
Forsyth Barr analyst Guy Hallwright says the company appears to be well run but says its growth was due in part to the boom in plasma TV screens in Australia.
"I don't think it will have any great impact on The Warehouse," he said.
Uechtritz said Hill & Stewart would remain as a distinct brand and the company would establish it in centres with fewer than 80,000 people.
Uechtritz acknowledged that retailers such as CD Store were facing increased competition from the internet but people would always want to have hard copies of albums and movies. Hill & Stewart, which sells audiovisual, whiteware, cameras, computers and small appliances, is expected to earn more than $60 million in sales in 2006-07.
