Michael Hill Newmarket was targeted by thieves last year. Photo / Hayden Woodward
Michael Hill Newmarket was targeted by thieves last year. Photo / Hayden Woodward
Michael Hill is benefiting from higher margins on jewellery as shoppers return to stores, with its sales hitting a record in the six months to December, despite crime impacting earnings.
The Brisbane-based jeweller reported record first-half revenue of A$363.4 million, up 11 per cent or A$30m compared to the previous half-year period, despite having 22 fewer stores operating and increasing its margins.
Its net profit rose 1.2 per cent in the period to A$37.6m.
“With the impacts from Covid behind us, significant productivity gains on pre-pandemic trade have been delivered across an optimised store network in all markets,” chief executive Daniel Bracken said.
“I’m particularly pleased elevated gross margins have been sustained, supported by the further evolution of our loyalty programme, reimagined digital experience, enhanced product offering and yet another beautifully executed Christmas campaign that truly resonated with our customers.”
More customers returned to its physical stores during the period, while digital sales declined.
“Following last year’s surge in digital sales from closed stores and with a strong consumer return to physical retail, digital sales declined by 9 per cent on last year, however were up 30 per cent on FY21 H1.”
New Zealand-specific revenue increased 13.8 per cent to NZ$76.3m.
Earnings before interest and tax (Ebit) were up 6 per cent at A$54.5m at the end of 2022.
The jeweller had $198.2m worth of stock on hand as it increased its inventory during the pandemic.
The company declared an interim dividend of A$0.04 cents per share, which was at A$0.035 cents per share a year ago.
The company said NZ’s weather events over the last few weeks have not affected their outlook. They said the company’s earnings would be ahead of the prior year if trading conditions “do not materially deteriorate”.
Michael Hill demonstrated how its fog cannons work at its Lynn Mall store, one of a raft of new security measures following a recent spate of robberies across the city. Photo / Carson Bluck
Ram raids
Michael Hill retailers faced a raft of burglaries and ram raids throughout last year, leading to store closures and increased security measures around Auckland stores.
Last year, the Herald reported Bracken’s decision to install DNA tracking spray to deter crime.
The company said an increase in crime impacted earnings.
“Given the uplift in the security incidents experienced by Auckland retailers through the half, additional investment in security was required to protect our team and stores, which had a direct impact on earnings.”
Cash reserves
Last year, Michael Hill’s board announced plans to use existing cash reserves to buy back up to 5 per cent of the company’s issued capital, possibly to buy other jewellery brands.
The number of shares to buy would be “dependent on business and market conditions” and launched last September.
The on-market share buy-back would see Michael Hill acquire 8.6 million shares at A$10.2m representing 2.2 per cent of equity.
“The company retains sufficient balance sheet strength and cash reserves for deployment into new earnings accretive growth initiatives,” Bracken said.
“These cash reserves and an undrawn debt facility reaffirm the company’s ability to pursue acquisition opportunities in the fine jewellery sector in our existing markets, which meet our strategic and investment criteria.”
