By Claire Reilly

Financial analyst group RBS Equities is forecasting that JB Hi-Fi could be hit by higher levels of stock loss due to fewer staff working on the retailer floor in its stores. The statement from RBS follows the release of JB Hi-Fi’s yearly results yesterday, in which the company announced that shrinkage levels (financial losses associated with theft) had negatively impacted gross margins by 13 basis points.

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Among the extensive details released as part of its results yesterday, JB Hi-Fi announced its gross margin had fallen by 94 basis points year on year, down to 21.1 per cent. According to the company, there were a number of factors associated with this drop.

“Our ability to achieve our volume based incentive targets in a challenging trading environment was more difficult [and] competitors chasing market share have driven higher and more aggressive levels of discounting," said a JB Hi-Fi statement to the ASX.

The company also noted that shrinkage was one of the key factors affecting gross profit margins, which RBS Equities analyst Daniel Broeren said was an issue for JB.

“Management conceded that an ongoing side-effect of driving productivity from existing staff (roster changes) was higher levels of stock shrinkage (theft),” Broeren wrote in the RBS report. “Comments on the call suggested less staff on the sales floor, particularly during quiet trading periods, had contributed to the $4 million increase in shrinkage, which in turn had reduced the gross profit margin by 13 basis points in FY12.

“In our view, total annual shrinkage of $12.2 million (FY12) is now a significant detractor from EBIT. We note the roster changes came into effect in 2H12, and hence higher year-on-year shrinkage costs could be seen in 1H13.”