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Michael Hill is honing in on the Australian market as sales boom across the ditch, changing its brand colours to green and gold and preparing to open a new flagship store in Melbourne.
A near 20 per cent improvement in Australian business in the first seven weeks of this yeardrove a 9.5 per cent increase in the group’s sales, the company revealed in its half-year financial result today.
New Zealand sales were down by 9 per cent compared with the beginning of last year, while sales in Canada were down 0.9 per cent.
“While the economic conditions and retail environment remain challenging in all markets, we are encouraged by our ongoing performance in Canada as a lead indicator, and early green shoots in Australia in the second half,” chief executive Daniel Bracken wrote in the update.
In the six months to December, the dual-listed company delivered a net profit before tax of A$21.8 million ($23m), down 55.4 per cent on the same period last year.
Earnings were down 51 per cent to A$28.8m as it put A$4m aside for a packaging legal dispute, spent A$3m on increased store security measures and paid A$200,000 in restructuring costs after letting go a number of senior managers to save costs.
Group total revenue increased by 4 per cent to A$362.7m, with its recently acquired jewellery business Bevilles in Australia filling a hole made by negative growth in Michael Hill sales.
Margins remained under pressure, due to higher input costs for diamonds and gold and increased discounting in the period.
The Michael Hill brand is getting a refresh in April this year with a new logo and colours. Photo / 123RF
Jarden analysts Guy Hooper and Nick Yeo said the result was in line with guidance but the extra A$4m put aside for the packaging litigation dispute was disappointing.
They said New Zealand was proving to be a laggard for the company and did not expect the jeweller’s margins to improve until the end of next year.
“Looking forward, input price pressures appear to be easing, however, given the slow inventory turn, this isn’t likely to show up in gross margins until December 2025.”
Bracken said on an investor call that its New Zealand business had suffered due to “major, major security challenges,” “political turmoil,” and higher interest rates.
“We do think the economy there will start to improve in the coming six to 12 months.”
However, the company was pushing ahead with what it called its multi-brand strategy; chasing all price points with various jewellery brands targeting luxury, premium, value and pure-play.
It launched a new luxury, bespoke engagement ring brand TenSevenSeven before Christmas, targeting a high-end consumer.
Michael Hill's new luxury, bespoke engagement ring brand TenSevenSeven was soft-launched before Christmas.
With no notable link to Michael Hill on its website, the new brand allowed consumers to build their dream ring online.
Michael Hill would remain its premium offering, and would undergo a complete refresh of its brand to be more “contemporary and feminine,” including logo and colours in April.
An image shown in its investor presentation showed the Michael Hill brand swapping its original purple colour for lime green and gold.
A new Michael Hill global flagship store would open soon after in Melbourne’s Chadstone shopping district.
This first look at Michael Hill's "store of the future" to be opened in Melbourne this year, was revealed in the company's latest investor presentation.
“The new store will incorporate all aspects of the new brand product and proposition, with a new high-value product offering, elevated in-store experience, and private selling spaces,” Bracken said.
The company was serving a lower-cost consumer through its fine jewellery business Bevilles, and its fashion jewellery business Medley.
“With each brand uniquely positioned for their target customer segments, and with both product and brand propositions established, the group will be well-placed to grow revenue and profits.”
The group had 272 Michael Hill stores and 36 Bevilles stores at the end of last year, but planned to grow its network by increasing the number of Bevilles stores to 100 across Australia and opening TenSevenSeven stores in capital cities.
Madison Reidy is the host of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
