Retail in Asia

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Rivals take toll on Australia’s JB Hi-Fi

Cut-throat competition in Australia’s home entertainment and electronics sector, led by rivals such as Dick Smith and Harvey Norman, has shaved JB Hi-Fi’s margins to a barely profitable level and forced the former market darling to issue its second profit warning in five months.

JB Hi-Fi, once a high flyer of the stockmarket which year after year lifted earnings at double-digit rates with margins other retailers would kill for, has been dragged into a damaging electronics price war. CEO Terry Smart said on Friday that some of its rivals were selling popular items such as iPods at cost.

Intense competition stemming from the likes of Dick Smith, whose owner Woolworths is looking to sell, and excess stock dumped on the market after the collapse of Wow Sight & Sound this year were slashing shelf sticker prices.