Michael Hill International’s New Zealand stores post 7.4% half year revenue drop, strategic review under way

Michael Hill International's New Zealand segment posted a 7.4% fall in revenue for the half-year to December 29. Photo / 123rf

Michael Hill International’s New Zealand stores underperformed the business in its latest half-year financial results, amid challenging retail conditions at home.

The jeweller reported group revenue of A$360.2 million ($398.98m) for the half-year to December 29, down 0.7% compared with the previous corresponding period (A$362.7m).

Comparable earnings before interest and tax (ebit) fell to A$24.1m – at the upper end of previous guidance – compared with A$31.3m in the first half of 2023.

Statutory net profit after tax for the half year increased to A$16.9m, up from A$15.4m.

The group’s New Zealand stores posted a 7.4% fall in revenue to $60.5m for the half year and a decrease of 7.8% on a same store sales basis.

Gross profit fell from $39.1m to $35.6m, while comparable ebit dropped from $10.1m to $9.4m.

One new store opened in New Zealand over the half year for a total of 45 stores – one fewer than the number at the end of the previous first half.

“The prevailing macroeconomic pressures continued to impact consumer sentiment and discretionary retail trading conditions throughout 2024, with conditions in New Zealand remaining particularly challenging,” the group said.

“An internal strategic review of our New Zealand segment is under way as we navigate the cyclical downturn in the economy, leverage the brand’s heritage and re-establish the profitability of this segment.”

The group also gave a trading update for the first seven weeks of the second half of the financial year where group sales were up 1.7% but its New Zealand segment was down 1.9%.

In Australia, the company has 166 stores, including 38 Bevilles. Half-year revenue increased by 1.2% to A$204.7m, with five fewer stores than a year ago.

Same store sales rose 0.6%.

Gross profit rose from A$122.6m to A$123.9m, while comparable ebit fell from A$25.6m to A$22.5m.

The group’s Canadian segment delivered another record sales performance with a 2.7% increase in same store sales.

Half-year revenue rose 2.4% to C$90.6m ($110.9m).

Gross profit rose from C$54m to C$55.1m, while comparable ebit fell from C$13.8m to C$13.6m.

The group has 83 stores in Canada, down two from the previous half-year.

Michael Hill International said its decline in performance was driven by more aggressive retail competition, higher annualised operating costs across labour and occupancy, and the ongoing challenges of raw material costs, particularly gold pricing.

Managing director and chief executive Daniel Bracken said: “Whilst we are disappointed with our overall ebit result for the half, the business was comping record prior year sales in both October and November, with eight fewer stores. Our gross margin is improving, underpinned by product and brand initiatives, despite the headwinds of elevated gold prices.”

Bracken said the business was committed to delivering cost reductions through the second half. It had set a target of $5m in cost reductions.

The group had a closing net debt position of $9.8m, down from $11.6m in half-year 2023.

It declared no dividend for the half year.

Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.