Hill sees trouble across Tasman

Listed jewellery retailer Michael Hill International, which yesterday reported a lift in profit and revenue for the six months to December, says this year's floods and cyclone in Australia will make for difficult trading in that market in coming months.

Company chief executive Mike Parsell said the weather events, which saw three-quarters of Queensland declared a disaster zone, would have a significant impact on consumer confidence.

The large amount of money Australians had committed to relief appeals for disaster victims would also mean they had less cash available for discretionary spending, as would upcoming interest rate rises, Parsell said.

New Zealand had a strong six months of trading, he said, with revenue increasing 7.1 per cent to $56.1 million and same-store sales up 6.2 per cent.

But there were indications the economy would tighten.

"All those things considered, we just have to be a little bit cautious in terms [of] our outlook," Parsell said.

Australian sales were up 6.1 per cent to A$140.9 million ($187.3 million) in the six months to December, compared with the earlier period, while same-store sales rose 5.7 per cent.

Parsell said Michael Hill's US retail operations - which reported an operating loss of US$2.1 million ($2.8 million) compared with a loss of US$2.9 million ($3.8 million) in the previous period - continued to weather the impact of that country's sluggish economic environment.

In Canada, where the company now operates 30 stores, revenue was up 23.5 per cent to C$20 million ($27 million), with an operating surplus of C$423,000 - a 182 per cent increase on the earlier period's result.

Parsell said the company planned to open 35 to 40 new stores in Australasia over the next five years, and a further 70 in Canada within the same time frame.

Michael Hill's share price closed at 89c last night.