As 2026 approaches, investors are evaluating whether to buy shares in two prominent Australian retailers, JB Hi-Fi and Harvey Norman. Both companies are key players in the consumer discretionary sector, which has remained relatively stagnant over the past year, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) rising only 1.6% since last year. This analysis will explore the prospects for both retailers as they navigate fluctuating economic conditions.
JB Hi-Fi: An Overview of Market Position
JB Hi-Fi Ltd (ASX: JBH) specializes in consumer electronics and white goods through its various retail outlets, including JB Hi-Fi and The Good Guys. Recently, the company has faced challenges, with its shares dropping approximately 18% since late 2022. Over the last six months, the decline has been around 3.3%. These figures reflect a broader trend influenced by shifting inflation and cash rate news, which has dampened consumer sentiment.
Despite these challenges, JB Hi-Fi reported quarterly sales growth across all its divisions, indicating that the brand still resonates with consumers. The company offers a dividend yield of just over 3%, which could appeal to income-focused investors.
In terms of share price forecasts, RBC Capital Markets set a price target of AUD 101 for JB Hi-Fi shares last year, while TradingView’s analysts suggest an average target of AUD 102.89. This indicates a potential upside of between 8% and 11% from the current share price, suggesting that there may still be opportunities for investors.
Harvey Norman: A Strong Performer in Retail
In contrast, Harvey Norman Holdings Ltd (ASX: HVN) has experienced a significant increase in its share price, rising over 46% in the past year. This impressive growth is largely attributed to strong financial results for FY25. Currently, shares are trading at approximately AUD 6.78, raising questions about the sustainability of this upward trend.
Similar to JB Hi-Fi, Harvey Norman offers a robust dividend yield, with forecasts predicting fully franked dividends of 4.5% for FY26. Analysts remain optimistic, with Bell Potter maintaining a buy rating and setting a price target of AUD 8.30. This projection suggests an upside of more than 22% from current levels, indicating potential for further growth.
As investors weigh their options, both companies present unique opportunities. JB Hi-Fi’s recent decline may attract bargain hunters, particularly given its dividend yield and potential for recovery. Meanwhile, Harvey Norman’s recent performance and positive forecasts suggest it may continue to be a strong investment choice.
Ultimately, the decision to invest in either retailer will depend on individual financial goals and risk tolerance. As the new year approaches, both JB Hi-Fi and Harvey Norman remain in the spotlight for investors looking to capitalize on the consumer discretionary sector.
