Jewellery retailer Michael Hill will post a strong uplift in first-half earnings and record sales
The jewellery retailer is on track to post a strong lift in earnings for the December half and record sales as consumers spent up on rings, necklaces and earrings.
Michael Hill International says a buoyant environment in the first 6 months of the financial year have driven almost double digit earnings growth for the jeweller.
The company said it expects to report record sales of $363.3m, up almost 12 per cent, at its half-year results next month, although online sales lost momentum as people returned to visiting stores after Covid-19 restrictions eased.
On Thursday, Michael Hill became the latest retailer to update the market on its recent trading performance in the lead up to reporting season, unveiling that it expected first-half earnings of $52m to $55m, against $51.6m recorded in the first half of 2022.
The group – with stores across Australia, NZ and Canada – said half-year sales were up 11.7 per cent on last year with strong margin performance maintained despite experiencing higher input costs, and a retail environment driven by heavy promotions.
The retailer said pent up demand and a strong Christmas helped drive the results. Following last year’s surge in digital sales from closed stores and with a strong consumer return to physical retail, digital sales declined by 9 per cent, but were still up 30 per cent on the first half of 2021.
Among its key regions, sales in Australia for the first half rose 18 per cent to $190.6m, in New Zealand sales lifted 13.8 per cent to $76.3m and in Canada sales improved by 0.5 per cent to $92.2m.
“I’m particularly proud of these results, given we were coming (comparing to) a record second quarter last year, where we benefited from pent-up demand and strong economic conditions,” said Michael Hill chief executive Daniel Bracken. “This year, while the first quarter results were cycling store closures, the delivery of 4 per cent growth in the second quarter was outstanding, underpinned by yet another strong Christmas execution.
“Pleasingly, first half sales were up 12 per cent on last year, and for a more meaningful reflection of fiscal 2023 performance, up 14 per cent on two years ago.
“While record sales were a highlight, equally pleasing was our ability to maintain elevated margins despite significant input cost pressures and increased promotional activity in the market.”
Michael Hill said it opened 3 new stores in the 6 months to December 31 – two in Australia and one in Canada – with one underperforming store closed in Australia. It ended the half with a network total of 282 stores.
The bullish trading update from Michael Hill follows similarly strong recent trading reports from key national retailers JB Hi-Fi and Super Retail Group which showed consumers were still spending at elevated levels despite a string of rises in official interest rates and higher cost of living expenses.
Shares in Michael Hill ended down 3c, or 2.6 per cent, to close at $1.13 on Thursday. They are down 20 per cent in the last 12 months.
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