👉 Background: JB Hi-Fi is an Australian electronics retail company that started back in 1974, selling everything from laptops, cameras, gaming consoles, to TVs and home appliances… and formerly had a ginormous section for music albums and singles too.

👉 What happened: In the latest financial year, JB announced some BIG results - their group sales were up by 10%, and their overall net profit increased by 5.4%. As part of this earnings update, JB’s CEO Terry Smart announced he would be hanging up his CEO lanyard and retiring. And as a parting gift to shareholders, he announced a special dividend.

👉 What else: Despite these positive results and the special dividend, JB’s shares fell nearly 8%, largely because investors were mourning the news of its CEO resignation and the unknown of what comes next.

What's the key learning?

‍💡Strong numbers don’t always mean a strong market reaction, especially when leadership changes happen. A CEO exit can sometimes worry investors more than strong profits can reassure them.  

💡 Since Smart rejoined JB Hi-Fi as CEO in 2021, its shares have increased by 151% despite the tough retail environment. Interestingly, when Terry Smart was first announced CEO in 2010, JB’s share price also took a hit because investors feared the unknown of a new leader.  

💡 But it's not just at JB Hi-Fi where the ‘CEO-resignation’ hits the share price. We’ve seen this before when REA Group’s CEO stepped down in February - he beat REA’s half-year profit forecast, but REA's shares still dipped 4%.