Jeweller Michael Hill’s sales jump 6pc, earnings expected to be lower

Daniel Bracken, chief executive of Michael Hill, said he is pleased with the company's trading in the last year. Photo / Supplied

International jeweller Michael Hill says its full-year sales jumped 6 per cent on last year, despite store closures and ongoing retail crime.

However, the dual-listed retailer experienced a slower second half, with sales down 0.8 per cent from the previous second half.

In a trading update this morning, the company said it expected its full-year earnings before interest and tax (EBIT) to be between A$56 million (NZ$60.5m) and A$59m, down from last year’s A$62.9m.

Group sales - across New Zealand, Australia and Canada - were up 6 per cent on last year, coming in at A$628.1m.

Sales in New Zealand were up 5.8 per cent.

Chief executive Daniel Bracken said, “While acknowledging the challenging economic conditions faced globally, I am pleased with the delivery of full year sales growth in all three markets, against what was a record prior year.

“With second half sales flat to last year, I am encouraged by the brand elevation strategy continuing to deliver market share gains.”

Michael Hill’s half-year result posted in February showed record first-half revenue of A$363.4m, up 11 per cent or A$30m compared to the previous half-year period, despite having 22 fewer stores operating and increasing margins.

Full-year online sales were down by 1.4 per cent on the prior year but were up 21.3 per cent on 2021.

Michael Hill closed two “underperforming” stores in New Zealand and three in Australia during the year, and opened two new stores in Australia and one in Canada.

The company also completed its acquisition of Australian jewellery retailer Bevilles last month and said today that the company’s key focus is now on nationally expanding Bevilles’ store network.

“With the inclusion of 26 acquired Bevilles stores, the store network totals 304 across all markets at the end of the year,” the company said.

Bracken said today that new locations are planned to open before the end of the year: “Discussions are already well advanced to secure new store locations to open prior to Christmas, and for entry into a new state market in the new year.”

The Herald reported in April that the retailer’s Takapuna branch had to close its doors after repeated robberies, becoming its most ram-raided store in the country.

Chairman Rob Fyfe told the Herald: “Ultimately the most important thing is the safety of our people. We decided the location of that store on that corner was too exposed.”

Michael Hill chairman Rob Fyfe and New Zealand national retail manager Michael Bell at Takapuna branch, following ram raids at several of the international jeweller's stores. Photo / Supplied

Australian revenue rose 9.1 per cent on last year, coming to A$331m across 172 stores, including 26 Bevilles stores.

New Zealand sales revenue was at A$132.4m, up 5.8 per cent on last year across 46 stores by the end of the full year, while Canada’s sales revenue came in at A$158.1m, up just 0.4 per cent on last year across 86 stores.

“While margins will be slightly down on the FY22 peak, they are expected to be ahead of both FY21 and the years leading into the pandemic,” the company announced.

Michael Hill said it had successfully refinanced its banking facility: “Prior to year-end, a replacement three-year A$90m facility was finalised on favourable terms, which will support the company’s strategic growth initiatives.”

The Herald reported last month that Michael Hill’s revolving credit facility required refinancing before the end of the full year.

“Credit approval has been provided by ANZ and HSBC for the refinancing of a new three-year $90m facility. Formal documentation is expected to be executed prior to financial year close,” the company announced last month.

The company said its new facility will support strategic initiatives including the national expansion of the Bevilles store network, the launch of the new digitally-led Bespoke diamond jewellery brand, and further the rollout of its gold recycling platform.

Michael Hill will announce its full-year results on August 25.