Michael Hill delivers lower earnings amid macroeconomic challenges

Michael Hill delivered significantly lower earnings before interest and taxes in the fiscal first half amid difficult macroeconomic conditions.

The jewellery retailer’s comparable EBIT plummeted 43 per cent to $31.3 million while revenue, including Bevilles, slightly increased 4 per cent to $363 million.

Retail revenue rose 10.2 per cent to $202.3 million in Australia and 0.5 per cent to C$88.6 million ($99.9 million) in Canada.

In New Zealand, retail revenue declined 10.3 per cent to NZ$65.4 million ($61.6 million).

The group’s gross margin stood at 61.5 per cent, reflecting higher input costs for gold and diamonds and increased promotional activity in response to more challenging retail conditions.

“There is no doubt that the first half was a challenging period for much of the discretionary retail sector,” said Michael Hill MD and CEO Daniel Bracken.

“Notwithstanding market conditions, the business remains committed to its multi-brand group strategy with a focus on elevating the Michael Hill brand and expanding the Bevilles network to continue to take market share.”

In May, the company is set to open a new global flagship in Chadstone, Melbourne, and plans to increase the Bevilles network from 26 to 36 in its first year of ownership.

For the first seven weeks of the fiscal second half, the group’s sales rose 9.5 per cent from last year with Australian sales growing 19.6 per cent. Sales in Canada and New Zealand fell 0.9 per cent and 9.2 per cent, respectively.

“While the economic conditions and retail environment remain challenging in all markets, we are encouraged by our ongoing performance in Canada as a lead indicator and early green shoots in Australia in the second half,” said Bracken.

You have 7 articles remaining. Unlock 15 free articles a month, it’s free.