Michael Hill's New Zealand operation underperformed as the group's EBIT looks set to miss last year's performance. Photo / 123RF
Michael Hill's New Zealand operation underperformed as the group's EBIT looks set to miss last year's performance. Photo / 123RF
Michael Hill International’s New Zealand stores continue to underperform with the business falling short of its first-half revenue of last year.
According to a trading update for the 26 weeks ended December 29, 2024, the group’s comparable earnings before interest (Ebit) is anticipated to be between $22.5 million and $24million, down more than $7 million from FY24H1 (the first half of the financial year in 2024).
Michael Hill group sales have also fallen to $359.1m, down 1% on FY24H1 at $362.7m, although it is flat on a constant currency basis.
Looking at the territories, Canada is again leading the way with same-store sales growth of 2.7% to $89.7m, while Australia reported a small rise of 0.6% to $194m compared to FY24H1.
New Zealand, however, continues to be “adversely impacted by economic conditions”, with sales down by 7.8% in FY25H1 to $59.2m compared to $64.2m in FY24H1.
Daniel Bracken, chief executive of Michael Hill, said while the first half results were disappointing, fewer stores contributed to the decline. Photo / Supplied
Daniel Bracken, Michael Hill International managing director and chief executive, said the result was disappointing, but the group’s performance in October and November remained comparable to last year despite eight fewer stores.
“The flat sales for the half reflected strong business performance in the first three months, offsetting the more challenging trading conditions at the beginning of the second quarter,” Bracken said.
“The strong performance trend that we observed in the first three months of the half has re-emerged through December and January.”
The group’s gross margin is expected to be in the range of 61% to 61.5% for the half, improving on the FY24 performance of 60.6%.
Digital sales also continued to grow due to “strong digital traffic and the deployment of Bevilles’ omni-initiatives”, representing 8% of total Group sales for the half.
Bracken highlighted new product initiatives over the half, including the expansion of its “LAB.” collection, alongside the launch of its new product range “Pendant Bar”, where customers build their own personalised bracelet and necklace combinations.
The business has continued to roll out its new flagship Michael Hill stores as part of its rebranded in-store experience, opening its second global flagship in Melbourne.
The Queenstown store in New Zealand was also refurbished to match the new store design.
Over the first half of the financial year, nine stores were permanently closed including seven in Australia and two in Canada, while one new NZ store was opened.
Michael Hill now has 256 stores, with 128 in Australia, 45 in New Zealand and 83 in Canada.
The group also has 38 Bevilles stores after adding two in Australia, taking the total group network to 294 at the end of the half across all markets, a net loss of six compared to FY24.
“As always, I’m very proud of our team for their retail execution, determination and resilience during an incredibly tough trading environment,” Bracken added.
“The business is clear on its strategic priorities and is increasingly well-positioned for when the economic cycle recovers.
“And pleasingly, the first few weeks of January are very encouraging with signs of strong positive sales momentum, particularly in Canada.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
