Michael Hill International is warning that its first half trading result will be materially below last year's record interim result of $19.5 million.
The latest result, excluding restructure tax benefits, was affected by lower margins and several one-off costs associated with United States acquisitions and internal restructuring, thecompany said today.
"December sales targets were difficult to achieve in the tough retail conditions we were facing, especially in New Zealand and Canada.
"Margins for the group will be significantly lower for the half due to exchange rate deterioration on inventory purchases and also due to the difficult conditions that necessitated us going on 'sale' in all markets earlier than normal," chairman Michael Hill said.
"A conscious decision was made to target sales at the expense of margins due to the uncertainties of the current economic climate. Managing inventories and cash flow was seen as a priority."
Sales figures published today show Australian same store sales up 1.2 per cent to A$113.7m ($137.7m) for the six months to the end of December, although in New Zealand dollar terms the increase was 5.7 per cent.
In this country same store sales fell 9.3 per cent to $48m. In Canada they fell 10.4 per cent to $C10.1m ($14.6m), while in NZ dollar terms the Canadian fall was 3.8 per cent.
Total same store sales rose 1 per cent to $198.9m, with the total for all stores up 8.7 per cent to $226.9m. The half year result will be released on February 20.
MHI shares were down 2c to 55c around mid-afternoon today.
