Michael Hill boosts profit after tough year

Jeweller Michael Hill has boosted full-year profit to $16.5 million from $1.6m in 2018, but is still bruised from a difficult year.

A model showcases natural-coloured diamond rings and natural stone jewellery from Michael Hill. Picture: Bianca De Marchi

Jewellery retailer Michael Hill has boosted full-year profit to $16.5 million from $1.6m in 2018, but is still wearing the bruises of a difficult year.

The company’s shares halved in the past year thanks to profit downgrades, the discovery it had underpaid wages and a tough trading environment.

Its profit boost was helped by the closure of its loss-making Emma & Roe stores and sales growth from its chains in Canada, but the company recorded revenue slides across its key markets in Australia and New Zealand and is pushing through a restructure in 2020 to refocus on improving its core retail offer.

Michael Hill yesterday said its profit had leapt to $16.5m while pre-tax earnings rose to $21.1m from $8.9m in 2018, as group revenues softened to $569.5m from $575.5m. In 2018, its profit slumped by 85.9 per cent as its accounts were crunched by $25.5m in closure costs for its US and Emma & Roe businesses.

Underlying earnings were a better reflection of the tough year Michael Hill had gone through, falling to $34.6m from $40.1m with gross margin also weaker at 62 per cent, against 63.7 per cent last year.

Shares in Michael Hill ended down 0.5c at 49.5c.

The company said the decline in underlying earnings was partially offset by its cost-out program, announced in February, with the 2019 earnings performance hit by employee remediation costs of $4.5m, one-off aged inventory impairment of $6m and employee restructuring costs of $2m. Last month, it revealed it had underpaid staff for six years and may have to pay $25m in backpay.