Jeweller Michael Hill loses some sparkle in tough trading conditions
Trans-Tasman jewellery retailer Michael Hill International has swung to an annual loss on the back of tough trading conditions.
Trans-Tasman jewellery retailer Michael Hill International has swung to an annual loss on the back of tough trading conditions, with the chain hit by higher labour, rent and raw gold costs on one hand and tight consumer wallets on the other.
The group booked a net loss of $479,000 for the year to June 30, down from a net profit of $35.2m a year earlier.
Earnings before interest and tax plunged 75.8 per cent to $14.2m.
The retailer’s results, released to the market late on Friday evening, showed lower gross margins combined with inflationary cost pressures to squeeze its bottom line.
“Retail conditions for the fine jewellery sector over the last 18 months have been challenging due to low consumer confidence and broader macroeconomic pressures,” commentary accompanying the results said.
But Michael Hill saw some signs of encouragement in sales for the first weeks of the current year.
“The first eight weeks sales performance has been encouraging, with positive performances from both Australia and Canada, and some improvement in New Zealand where conditions still remain more challenging,” Michael Hill managing director and chief executive Daniel Bracken said.
“As we plan for the year ahead, initiatives are under way to drive sales and productivity, enhance margin, optimise inventory and prioritise operational expenditure across the group.”
For the 2024 financial year, Australian sales revenue lifted 10.3 per cent to $359.1m on a 25-week basis. Canadian sales edged up 0.6 per cent to $C157.1m ($170.2m) on the same basis. But New Zealand sales revenue fell 11.8 per cent to $NZ114.8m ($106m).
“Inflationary cost pressures impacted the majority of operating expenses across the business, the most significant being store labour and occupancy,” Mr Bracken said.
The company also revealed higher input costs for gold and mined diamonds had continued through the year.
The group has withheld a final dividend, after an interim payout of 1.75c per share. Total dividends for the prior year were 7.5c per share.
Its shares closed ahead of the results on Friday at 56c each.
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