Jeweller Michael Hill shares rally on sparkling trading update

Sales for jeweller Michael Hill International have accelerated since July with the promising Christmas trading period still ahead, sending shares in the retailer higher.

Jewellery retailer Michael Hill International shares rallied on a sparkling trading update.

Shares in jeweller Michael Hill International rallied strongly after the retailer updated its recent trading performance to investors at its annual general meeting to show sales at its Australian and New Zealand stores accelerating over the past four months.

While sales growth at its Canadian stores were not as strong, there were emerging sings of improving profit margins for its business, and with the crucial Christmas trading period still ahead of it the market embraced the update positively.

Shares in Michael Hill leapt 7.8 per cent to 55c on Wednesday.

Addressing shareholders, Michael Hill chief executive Daniel Bracken said for the first 14 weeks of fiscal 2025, group sales were up 4.3 per cent, with same-store sales in Australia up 6.3 per cent and sales in Canada up 4.7 per cent.

New Zealand sales were down 4.2 per cent.

“As we prepare for the all-­important Christmas trading period, the positive momentum we have seen in the first 14 weeks of fiscal 2025 is very encouraging,” Mr Bracken said.

“Our two largest markets of Australia and Canada have shown good and consistent growth, and our digital channels are performing well, driving strong omni-channel adoption from our customers. While New Zealand is still under-performing, the recent economic improvements are encouraging, and we are seeing some green shoots in performance,” he said.

“Couple this with next week’s launch of our new campaign – “It’s a Michael Hill Christmas” – together with our best-in-class instore visual merchandising and focused retail execution from our teams, I’m confident that we are well-placed for the critical Christmas trading period.”

The trading update also revealed that there had been a recovery in gross profit margin.

Michael Hill chair Rob Fyfe told shareholders that lower interest rates in Canada and New Zealand should help to support trading momentum, although the global economy remained tough.

“Pleasingly, we have now seen interest rate reductions in both Canada and New Zealand, and are seeing some early signs of improved trading performance, albeit we expect the recovery will be gradual over the remainder of the financial year,” he said.

“Given the difficult trading environment, the business made some tough yet prudent decisions to navigate the group through one of the worst retail cycles for some decades. We exited several senior leadership roles, reduced unit operating costs, reduced capital expenditure, and executed an inventory optimisation strategy.”

Citi analyst James Wang said he expected Michael Hill to deliver around 160 basis points of margin improvement in the first half, relative to the second half of 2024.

“Company commentary of ‘meaningful improvement’ is consistent with that expectation. With the important Christmas trading period still ahead, we are encouraged by the update. The company is executing a rebranding and we’d like to wait to see whether the strategy gains traction,” Mr Wang said.

Mr Bracken told investors the recent acquisition of the Bevilles chain was proving beneficial.

“Even with the challenging trading conditions in the fine jewellery sector, the business has held firm on its strategic intent to grow the footprint and strengthen Bevilles’ position in the market. During the first year of ownership, the Bevilles network grew from 26 to 36 stores. With the expansion of the network into Queensland, the business will focus on optimising the store layout, product range, and building brand presence prior to rolling out further stores.”

Originally published as Jeweller Michael Hill shares rally on sparkling trading update