Michael Hill International Limited Analysis

Overview

The Michael Hill story began in 1979 when Sir Michael and his wife Christine opened their first store in the New Zealand town of Whangarei, some 160 kilometres north of Auckland. Since then, the company growth has been guided by a unique retail jewellery formula. Through dramatically different store designs, a product range devoted exclusively to jewellery and development of high impact advertising, Michael Hill Jewellers rose to national prominence. In 1987 Michael Hill International was listed on the New Zealand Stock Exchange, the same year the Group expanded into Australia.

In 2002, Michael Hill expanded into North America, opening its first stores in Vancouver, Canada. The Canadian presence now includes stores in British Columbia, Alberta, Manitoba, Saskatchewan and Ontario.

The first Michael Hill stores opened in the United States in September 2008. There are now stores in Illinois, Ohio, Minnesota and New York.

Exclusive jewellery collections available at Michael Hill stores include Michael Hill Designer Bridal, Infinitas, Everlight and Spirits Bay (New Zealand only).

As at June 2016, there are 168 stores across Australia, 52 in New Zealand, 67 in Canada and 10 in the United States. There are also four Michael Hill online stores servicing each market.

In June 2016, Michael Hill under took a Scheme of Arrangement with a plan to become a dual-listed company. Michael Hill relisted on the New Zealand Stock Exchange and listed as a primary listing on the Australian stock exchange effective 7 July 2016.

Performance

The following information was extracted from Michael Hill International Limited's Half year results, Released 24 February 2024:

Key Financial Results

• Group revenue was $360.2m (FY24H1: $362.7m) a decrease of 0.7% in the half, and was flat on a constant currency basis.
• Group gross margin improved to 61.3% for the half, in line with previous guidance and up on FY24 of 60.6%, underpinned by product and brand initiatives which are offsetting higher input costs and aggressive retail trading conditions. Gross margin was also enhanced by the introduction of higher margin gifting products that increased transaction volumes for the key Christmas period.
• Comparable earnings before interest and tax (EBIT) of $24.1m (FY24H1: $31.3m), at the upper end of previous guidance.
• Statutory net profit after tax increased to $16.9m (FY24H1: $15.4m).
• Active inventory management delivered a $6.6m reduction to $213.2m (FY24H1: $219.8m).
• Closing net debt position of $9.8m (FY24H1: $11.6m), with the business remaining committed to a reduced capital expenditure profile across both technology and stores. - Management have deployed targeted initiatives to deliver ~$5m of cost reductions in the second half as we align resources to our strategic priorities and trading performance.

Current Trading Update

-For the first seven weeks of FY25H2, Group sales were up 1.7%, and Group same store sales were up 3.2% on prior year. For same store sales (in local currency)

• Australian segment up 3.8%
• Canadian segment up 6.7%, and
• New Zealand segment down 1.9%