Michael Hill warns of double-digit decline across jewellery sector thanks to lacklustre spending

Michael Hill chief Daniel Bracken says the jewellery industry is facing double-digit sales declines since the start of the year.

Michael Hill chief executive Daniel Bracken. Picture: AAP

Jewellery chain Michael Hill has warned of softening sales since the start of the year as worsening economic conditions press down on discretionary spending, mirroring recent comments from other retailers about a shopper slowdown.

In a trading update to the market on Wednesday, the Australasian jewellery retailer said a number of economic headwinds in both Australia and New Zealand had triggered a double-digit sales decline for the jewellery category, although the impact to its sales had not been as bad.

“Given the prevailing economic conditions and resulting softening of consumer sentiment, trade has been more challenging for the jewellery industry in the second half, particularly in Australia and New Zealand, with New Zealand having also been impacted by significant weather events and a recent resurgence of security incidents and related costs,” Michael Hill said in an ASX statement.

“Third party transactional data for the total Australian retail jewellery segment has shown a double digit decline in sales for the first four months of the second half.

“However, Michael Hill group sales for the second half are only down 3.5 per cent, demonstrating that Michael Hill has continued to take market share even in a more challenging environment.”

Michael Hill’s total group sales for fiscal 2023 year to date are up 5.5 per cent, the retailer said.

Other companies have also reined in their sales forecasts for the year ahead on the back of softer consumer spending. Candles and fragrances chain dusk, gourmet food provider Maggie Beer Holdings and Treasury Wine Estates have all issued trading warnings and lowered their sales expectations.

Michael Hill chief executive Daniel Bracken told The Australian that industry-wide there was a sharp downturn in sales since the start of the year, but Michael Hill had done well to limit its sales decline to only 3.5 per cent.

He said his chain’s key customers were in that 25 to 45-year age bracket who have been experiencing rising interest rates and other cost-of-living pressures.

“Despite the more challenging market conditions and the resulting impact on many retailers, I’m encouraged by the Michael Hill performance, as we continue to take market share in our category,” he said.

Michael Hill also on Wednesday finalised its deal to acquire the Bevilles Jewellers business.