Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

Sales slump probe in store for Hill chain

Jewellery firm will analyse unexpected drop in trading to identify any oversight.

Post-Christmas trading in Australasia has been better than North America for Sir Michael Hill, jeweller. Photo / Brett Phibbs
Post-Christmas trading in Australasia has been better than North America for Sir Michael Hill, jeweller. Photo / Brett Phibbs

Michael Hill Jeweller will conduct an analysis to make sure the worse-than-expected trading the firm experienced over the Christmas period was no fault of its own, says chief financial officer Phil Taylor.

The Brisbane-based, NZX-listed jewellery retailer yesterday reported total sales of $312.8 million for the six months to December 31 last year, an 8.8 per cent increase on the same period in 2011, but said business over the December quarter, including the crucial festive season period, fell short of expectations.

Shares in Michael Hill fell 5c to close at $1.20 last night.

"We thought we were well set-up for Christmas - we had a good marketing campaign and were well stocked with inventory and well staffed ... The foot traffic probably wasn't as strong as we had expected across the board," said Taylor.

He said post-Christmas trading had been "reasonable".

"It's been a little bit quiet in North America at the start of January but down here [in Australasia] it's been okay."

The company said half-year earnings before interest and tax (ebit) were expected to be in the range of $34 million to $36 million, compared with $34.8 million in the corresponding period last year.

Total sales in New Zealand for the six-month period rose 3.7 per cent to $63.2 million, while in Australia sales lifted 9 per cent to $206.7 million.

On a same-store basis - which excludes the revenue of newly opened sites - New Zealand sales lifted 3.1 per cent to $62.5 million and Australian sales rose 2.6 per cent to $188.5 million.

Same-store sales rose 2.1 per cent and 0.8 per cent in its Canadian and United States operations, respectively, the company said.

The firm said that while all four of its markets had struggled to gain traction on the prior period's result during the second quarter of the half-year, it was pleasing that solid same-store sales growth had been achieved across all of its geographic locations. Cash flow remained strong.

Australian Bureau of Statistics data this week showed retail spending across the Tasman fell 0.1 per cent in November.

"November should be a good month for the retail sector towards the end of the month at least people start to focus on what will be in Santa's sack," said Australian National Retailers Association chief executive Margy Osmond.

"This didn't happen in 2012 and the result will send a chill through retailers' spines as they look to 2013."

Michael Hill will report its full half-year results on February 15.

- NZ Herald

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