US business a drag on Michael Hill first-half profit

Michael Hill blames a lower first-half profit on poor business conditions in the US, which the jewellery retailer plans to exit.

Michael Hill launches a new jewellery store in Melbourne. Pic: Eugene Hyland

Jewellery retailer Michael Hill International says its first-half profit was lower after deteriorating business conditions in the United States, which the company has now decided to exit, weighed on earnings.

The ASX and NZ-listed company (MHJ), which also has stores in New Zealand, Australia and Canada, said its profit for the six months to December 31 was $8.7 million. Its underlying earnings before interest and tax, or EBIT, for the period was $34.9 million, a decline of 12.6 per cent on the prior period, largely attributed to the ongoing deterioration of US operations and its Emma & Roe business, a challenging November trading period and increased expenditure in marketing activities.

“Management is taking steps to strengthen our core businesses through a continued focus on the productivity of our stores, and significant growth opportunities presented by a repositioned Emma & Roe brand, further expansion of Michael Hill in Canada and enhancements to the group’s omnichannel strategy,” said chief executive Phil Taylor in a statement.

“The group also made significant progress in working through the business challenges it faced in the first-half, leading to a decision in January to exit the US and reposition Emma & Roe into a new market segment with a material reduction in stores,” Mr Taylor continued. The US exit and repositioning of Emma & Roe should be completed by the end of the current fiscal year.

The company opened 14 new Michael Hill stores to bring the total of group stores to 347 at the half-year, including 30 for Emma & Roe.

Dow Jones Newswires