Michael Hill earnings soar

2.2 k views | Posted August 20, 2010 | By Sonia Nair

Michael Hill’s full-year results have been boosted by the performance of its Australian and New Zealand stores.

Across the business, the jeweller recorded an EBIT of NZ$36.2 million ($28.8 million) for the year to June 30, up 38 per cent from last year. Net profit before tax rocketed 53 per cent to NZD$30.9 million ($24.5 million).

However, profit after tax plummeted 60 per cent to NZ$26.5 million ($21 million) due to a deferred tax credit of NZ$50.2 million ($39.8 million) that fell in the 2008/09 financial year. Global revenue rose 7.6 per cent to NZ$443 million ($351.5 million).

Categories such as watches, bead charms and diamonds achieved particularly strong sales and margins over the year.

Michael Hill’s Australian stores performed particularly well, with a 6.9 per cent increase in revenue compared with last year. Same-store sales climbed 4.9 per cent, against a 0.3 per cent increase the year before.

During the period, the jeweller closed four stores in Australia but opened two new ones – in Top Ryde, New South Wales, and Northland, Victoria – bringing the total Michael Hill stores in Australia to 141.

In New Zealand, where Michael Hill has 53 stores, retail revenues climbed 6 per cent to NZ$95.8 million ($75.9 million). Same-store sales rose 6.1 per cent, compared with a decrease of 8 per cent the year before.

Michael Hill chairman RM Hill said in a statement: “Both [Australian and New Zealand] businesses grew revenues, margins and their bottom lines… This is testament to the strength of the Michael Hill brand in these markets, the maturity of our teams, and the strategies employed within the business over the past few years.”

Hill also attributed the increase in earnings to the launch of the company’s “fifth generation” store design, which has been introduced in about 40 stores around the world. He said the new design has resulted in “strong sales improvements” and given Michael Hill “a strong point of difference to [its] competitors and customer experience”.

Michael Hill was forced to close eight of its 17 US stores during the period and recorded an operating loss of US$6.2 million ($6.9 million) in the country. In Canada, operating losses widened to C$1.1 million ($1.2 million) due to the “a depressed retail sector”.

The company said it remains optimistic about improving growth and profitability further in the next financial year. It intends to refurbish another nine stores with the “fifth generation” global store design before Christmas.