Electronics giant JB Hi-Fi is making a move into the kitchen and bathroom categories in a move that opens the door to more direct competition with Wesfarmers and hardware chain Bunnings.

The company told investors on Monday that it will purchase Victoria-based retailer E&S Trading Co, which will increase its exposure to bathroom and kitchen renovators, alongside tradies.

It comes amid moves by other retailers like Wesfarmers and its hardware brand Bunnings to cash in on commercial trades in recent years, including through the acquisition of Tool Kit Depot.

JB Hi-Fi will pay $47.8 million for three-quarters of E&S, which has 10 showrooms in Victoria, one in the ACT and an online store with a combined revenue of $230 million last financial year.

Retail Doctor Group boss Brian Walker said JB Hi-Fi, which also owns The Good Guys, is increasingly looking to diversify its revenue model and sees the categories as prime for growth.

But it also foreshadows tougher competition with Bunnings and its owner Wesfarmers, he said.

“Once you have distribution well sorted and you have a good model of retailing you can start to venture into complementary categories,” Walker said.

“They’re seeing consumers have renovated heavily during the Covid period and are making large capital gains through their properties, so there’s a greater opportunity in the market.”

In its pitch to investors about the deal on Monday, JB Hi-Fi said E&S is “highly complementary” to its existing business, particularly in large appliances which JB and the Good Guys already sell.

But it also allows JB Hi-Fi to expand into new areas, including the bathroom category and into areas that appeal to commercial construction customers, architects and boutique builders.

“E&S is a high-quality business that prides itself on offering the world’s leading kitchen, laundry and bathroom brands at great prices, with expert advice and exceptional customer
Service,” JB Hi-Fi Group chief executive Terry Smart said about the impending deal.

“E&S have a highly complementary premium product offering, which will appeal to a new customer base, and a commercial construction market focus, making it a strategically compelling addition to the JB Hi-Fi Group.”

The move came as JB Hi-Fi reported full-year earnings on Monday, showing revenue for the past financial year (ended June) was flat at $9.6 billion against the backdrop of a stretched consumer.

Net profit after tax fell from $525 million to $439 million over the year, exposing how the company has had to sacrifice margin to maintain sales as shoppers struggle with cost-of-living pressures.

But shareholders nevertheless reacted positively to JB Hi-Fi’s result, sending its share price up 8 per cent to $72 by mid-afternoon trading.

Walker said that reflects market optimism about its expansion plans but also an assessment that JB Hi-Fi is well positioned to capitalise on a recovering consumer heading into early 2025.

“The market is looking for businesses that are prepared well for the upturn,” he said.

Smart said JB Hi-Fi is pleased with its trading performance, particularly since the start of the new financial year, with tax cuts and energy rebates easing pressure on households.

Over July JB Hi-Fi sales rose 5.6 per cent, while the Good Guys revenue was up 2.7 per cent.

“We will remain focused on our customers’ needs and continue to innovate as we navigate another uncertain year,” Smart said.