Michael Hill International books record sales as the jewellery sector bounces back from Covid

The end of Covid-19 and return of public celebrations for birthdays, anniversaries and weddings has helped fuel demand for jewellery.

Jewellery retailer Michael Hill has forecast higher than expected annual earnings following record sales and profit for the six months to December as consumer spending bounced back at the end of Covid-19 lockdowns.

Michael Hill, which is listed on the Australian and New Zealand stock exchanges, on Monday reported a 11 per cent rise in interim revenue to $363.4m with net profit up 1.2 per cent to $37.6m. Underlying earnings rose 5.3 per cent to $58.8m.

Michael Hill also increased its interim dividend to 4c a share from 3.5c, which will be paid on March 24.

“With the impacts from Covid behind us, significant productivity gains on pre-pandemic trade have been delivered across an optimised store network in all markets,” said chief executive Daniel Bracken.

“I’m particularly pleased elevated gross margins have been sustained, supported by the further evolution of our loyalty program, reimagined digital experience, enhanced product offering and yet another beautifully executed Christmas campaign that truly resonated with our customers.”

Michael Hill also benefited from the continued elevation of the brand and a pull away from discounting and promotions.

The retailer said throughout Covid-19 it saw an increase in customers embracing its digital channels and delivering significant growth. While its digital sales results for the half declined by 9 per cent on last year, they were up 30 per cent on the first half of 2021 and up 148 per cent on the first half of 2020.

During the six months to December, further progress was also made on its international digital strategy including the launch of international shipping, and further leveraging of third party marketplace partnerships in all three countries Michael Hill operates in - Australia, New Zealand and Canada.

In Australia, sales jumped 18 per cent to $190.6m over the six-month period. Sales in New Zealand sales rose 13 per cent to $NZ76.3m ($A70.19), but were flat in Canada at $CA92.1m.

In terms of outlook, the retailer said putting aside New Zealand’s severe weather events over the last few weeks, second half sales to date were in line expectations.

On the basis that retail trading conditions do not materially deteriorate, the company anticipates full year comparable EBIT will be ahead of prior year.

“I’m excited by the pipeline of brand and growth initiatives that will be progressively delivered to market in the coming months,” Mr Bracken said.

Michaell Hill shares last traded at $1.03 on the ASX.