According to JB Hi-Fi Group CEO, Terry Smart, the strategic rationale behind the acquisition of E&S Trading (e&s) was twofold – e&s is highly complementary to the group’s existing brands and e&s provides access to new and expanded customer segments and product categories.
“This includes the premium home appliance customer and category, the bathroom category, the large commercial construction customer, as well as boutique and volume builders and architects,” Smart said.
On Monday, JB Hi-Fi Group announced that it had entered into an agreement to acquire e&s with an initial acquisition of 75% for cash consideration of $47.8 million.
“We recognise that some brands overlap between The Good Guys and e&s. However, products from those brands are more in the premium space for e&s and more in the entry to mid segment in The Good Guys. Like we did with The Good Guys and JB Hi-Fi, we will look to leverage that with suppliers for potential margin improvements,” Smart added.
JB Hi-Fi Group chief financial officer, Nick Wells added: “The reason we want to own the e&s business is because of its exposure to construction and commercial customers, as well as the broader renovation market, even more so than The Good Guys. We are comfortable with their current financial position and are confident in future growth.”
JB Hi-Fi expects to be able to grow e&s both in Victoria and nationally.
“In terms of expansion, we need to do more work first, but there is a good opportunity to open more stores. When you think about the number of stores in Victoria alone (10), it indicates there’s potentially greater opportunity than other specialist stores with a footprint around the country. We will be clearer in terms of store numbers in the future,” Smart said.