Michael Hill International has forecast a double-digit increase in its first-half earnings after the jewellery retailer recorded solid sales growth for the period.
In the latest trading update, the company expects its comparable EBIT (earnings before interest and taxes) to be in the range of $27 million to $30 million for the six months ended December 28, representing a 12-24 per cent year-on-year increase.
Group sales for the period rose 3.1 per cent to $370.3 million, led by a 6.2 per cent growth in Canada, followed by a 2.4 per cent uplift in both Australia and New Zealand.
Group same-store sales increased 3.8 per cent, with the Canada segment up 6.1 per cent, Australia up 4.8 per cent, and New Zealand reversing previous decline with a 1.8 per cent improvement.
Gross margin for the half is expected to be broadly flat, with record-high gold, silver, and other metal input costs offset by enhanced overall product mix and focused promotional activity.
“Under new leadership, the group delivered profitable quarter-on-quarter growth, driven by significant performance improvements in the final 10 weeks of the half, resulting in a materially improved trading trajectory,” said Jonathan Waecker, CEO of Michael Hill International.
“During the critical Christmas trading period, a strong focus on driving customer demand, combined with more disciplined product planning, store operations, and targeted promotional activity, delivered profitable net sales growth while maintaining margin.
“This translated into a meaningful uplift in EBIT year on year, alongside disciplined working capital management, including a significant reduction in inventory, resulting in the group returning to a positive net cash position at the half,” he added.
During the period, the retailer opened one new store and closed three. Its network at the end of the half stood at 285, including 248 Michael Hill stores (123 in Australia, 43 in New Zealand and 82 in Canada) and 37 Bevilles locations in Australia.
The company will release its half-year financial results on February 27.
