JB Hi-Fi shares leap to record high despite legal scuffle

The corporate watchdog is alleging The Good Guys haven't been such 'good guys' after all.

| More on:
JB Hi-Fi staffer helping customer share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

JB Hi-Fi Ltd (ASX: JBH) shares are basking in a buying frenzy today, rising to an unprecedented level.

Australia's well-known retailer is fetching $65.65 per share, up 2% from yesterday. Yet the most impressive number today is $66.33, JB Hi-Fi's new all-time high share price.

Created with Highcharts 11.4.3Jb Hi-Fi PriceZoom1M3M6MYTD1Y5Y10YALL10 Jul 201411 Jul 2024Zoom ▾20152016201720182019202020212022202320242016201620182018202020202022202220242024www.fool.com.au

The major price milestone is being shared among several ASX 200 companies today, including Commonwealth Bank of Australia (ASX: CBA) and Xero Ltd (ASX: XRO).

However, if you haven't already spotted the difference, JB Hi-Fi is the only record-setter that's also hitting headlines today for being in hot water with the Australian Competition and Consumer Commission (ACCC).

Promotional problem goes to court

The corporate watchdog is taking a subsidiary of JB Hi-Fi to Federal Court on allegations of 'false or misleading' representations.

According to the release, the ACCC is pursuing The Good Guys for allegedly misrepresenting store credit promotions that were run between July 2019 and August 2023. The promotions, dubbed 'StoreCash,' purportedly failed to give this credit in accordance with their stated requirements.

Specifically, the ACCC alleges the promotions inferred a 'qualifying purchase' was the only condition for store credit despite customers also needing to approve marketing communications.

The legal headache for the JB Hi-Fi subsidiary doesn't stop there. Further allegations are levelled at The Good Guys over expiration periods communicated to customers. On this, ACCC chair Gina Cass-Gottlieb states:

We also understand that, for the majority of promotions, the store credit being offered expired within a very short period of time of ten days or less, which many consumers were unaware of.

If the allegations are true, the ACCC worries shoppers may have purchased items under false pretences.

Lastly, the corporate watchdog also alleges that store credits weren't provided promptly to 'thousands of eligible consumers' even when the consumer met all conditions.

The Good Guys, an electronics and white goods retailer, was acquired by JB Hi-Fi in September 2016 for $870 million.

The ACCC is seeking consumer redress, penalties, and costs, among other actions, through the Federal Court.

Why are JB Hi-Fi shares breaking records?

Despite the worrying legal news, JB Hi-Fi shares are firmly in the green. A tangle with the ACCC appears unable to squash bullish sentiment.

Today's optimism is widespread. Only 37 of the top 200 ASX-listed companies are falling in afternoon trade. Moreover, not a single sector is in the red — a telling sign of indiscriminate confidence in the Australian share market.

Lastly, JB H-Fi addressed the ACCC's actions with an ASX announcement. The company states it 'takes its compliance with the law very seriously and has a comprehensive compliance program in place'. Maybe that's enough to quell any concern among holders of JB Hi-Fi shares for now.

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

A woman sits amid a stylish home setting on a sofa with plush cushions with a coffee table and plant in the foreground while she peruses a tablet device.
Retail Shares

Up 185% in 5 years, how much further upside does Macquarie predict for Nick Scali shares?

The furniture retailer acquired UK-based Fabb Furniture in April last year.

Read more »

Two happy woman on a couch looking at a tablet.
Retail Shares

Ka-ching! 5 fastest growing ASX 200 retail shares of FY25

After strong share price growth, do brokers think these ASX 200 retail stocks have more room to run?

Read more »

Woman thinking in a supermarket.
Retail Shares

Coles vs Woolworths shares: which is the best buy?

Competition in Australia's supermarket sector will heat up further.

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
Retail Shares

Are Lovisa shares overvalued?

Has the fast fashion retailer already peaked this year?

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

Is the Wesfarmers share price a buy for passive income?

Does this stock enough on the income side of things to be appealing?

Read more »

a thoughtful shopper with shopping bags wearing sparkly gold dress and matching shoes reclines on a chair with hand to chin in thought.
Retail Shares

ASX retail stock down 92% in 16 months faces 'challenging outlook': expert

It's been a big fall from grace for this ASX retail stock after being the fastest riser of the All…

Read more »

A warehouse worker is standing next to a shelf and using a digital tablet.
Retail Shares

The pros and cons of buying Wesfarmers shares this month

There’s a lot to think about with this impressive retail giant…

Read more »

a woman wearing fashionable clothes and jewellery checks her phone with a satisfied smile on her face in a luxurous home setting.
Retail Shares

Why I think this ASX small-cap stock is a bargain at $7.85

I think this small company has big potential.

Read more »