Michael Hill boss Daniel Bracken says Australia can’t ‘control or eradicate’ Delta strain

Michael Hill International CEO Daniel Bracken says we must learn to live with the Delta strain, and vaccines offer the ‘light at the end of the tunnel’.

Michael Hill, led by chief executive Daniel Bracken, has reported a 15-fold jump in annual net profit to $45.3m with sales of laboratory sourced diamonds doubling. Picture: Richard Walker

Michael Hill International boss Daniel Bracken says a widespread vaccine rollout will be the “light at the end of the tunnel” for his jewellery stores as pent up demand from shoppers is let out of lockdowns.

The chief executive warned the Delta strain of Covid could not be “controlled or eradicated” and that Australia and New Zealand must learn to live with the virus.

Mr Bracken said the key was for a rollout that would open up the economy and give consumers confidence to venture out of their homes.

“Vaccination is gaining momentum in all of the markets, in fact Canada is post all of this and between 70 to 80 per cent vaccinated and we don’t anticipate any issues in Canada now. That is what we are looking forward to happening in Australia and New Zealand in coming months.

“There will have to be a new norm which is that Delta is not something that can be controlled and eradicated, and the new norm will naturally flow from vaccination rates.

“The light at the end of the tunnel is vaccines accelerating and getting to some sort of normal operating model.”

Mr Bracken said only then could the economy, businesses and consumers settle on a new normal, opening the barriers for his industry in particular for family celebrations marked with purchases of rings or necklaces.

And when it comes to millennial couples they are increasingly turning to laboratory made diamonds for their engagement rings as an socially responsible alternative to diamonds mined of the ground.

The retailer posted a 15-fold jump in annual net profit to $45.3m with sales of lab diamonds doubling over the last year.

“Laboratory grown diamonds are definitely gaining momentum and as the customer understands it, the more millennial, Gen Z customer, it has attributes that differ from mined diamonds,’’ Mr Bracken said.

“The whole path of provenance and the sustainability angle are important things and this is about us providing choice.”

Michael Hill’s bridal business, dominated by engagement rings, actually held up through Covid despite parties, weddings and other celebrations delayed or cancelled due to lockdowns.

Mr Bracken said these celebrations could be delayed but ultimately would happen, driving shoppers to his stores and burgeoning online platform.

“We had half of Canada closed for many months last year and we had Victoria closed on and off for about three months at the start of the year, and during those closures our online business grows … but over the full year we saw really strong results, when stores are open we are seeing absolutely outstanding performances.

“When Melbourne reopened at the end of October last year we had a really strong November and December.

“People come to Michael Hill for milestone events in their lives and people will wait for those events, it is not like they buy a different pair of shoes or dress, they all wait for those important pieces to mark the important times in their lives.”

Despite the disrupted trading conditions and the reduced global store network, total revenue rose 13 per cent to $556.5m as the company overhauled its brand and sold more products online. It’s results for 2021 included $14.6m in government grants such as JobKeeper.

Michael Hill reinstated its final dividend after halting payments to investors last year, and will pay shareholders 3c a share on September 24.

The latest round of lockdowns that have shut down retailers across Australia since July and pinched the earnings of Michael Hill by around $5m, and caused it to lose 2 per cent of sales, with that drop countered partly by better trading in Canada and New Zealand.

The total number of store trading days lost by Michael Hill to date since Covid-19 emerged has now surpassed more than 33,000 days.

Shares in Michael Hill ended up 1.5c at 84c.