Michael Hill boosts sales on Canadian growth

Sir Michael Hill at the opening of the revamped Whangarei store.

Michael Hill International, the jewellery chain that bears the name of its founder, reported a 10.5 percent gain in sales for the first nine months of the year, led by growth in Canada and Australia.

Sales rose to A$372 million in the nine months ended March 31, from A$336.8 million a year earlier, the Brisbane-based retailer said in a statement. Same-store sales rose 5.4 percent to A$338.6 million.

The company relocated to Australia in 2008, transferring its intellectual property to an Australian subsidiary in a transaction that put its head office in its largest market and generated tax breaks. Early this month Michael Hill announced an A$6 million settlement with the Australian Tax Office, which had disputed the valuation of IP.

Same-store sales in Australia rose 1.4 percent to A$214 million in the first nine months, while Canadian sales rose about 17 percent to A$41 million and US sales rose 17 percent to A$7.8 million.

Same-store sales in New Zealand gained 10 percent to A$75.2 million, although this largely reflected a strengthening kiwi dollar against the Australian dollar. In local currency terms, New Zealand sales fell 2.9 percent to $83 million.

Sales from the retailer's professional care plan business rose about 23 percent to A$24.5 million and the company brought A$13 million of PCP revenue to income, up 99 percent from the same period a year earlier.

The shares last traded at $1.33 on the NZX and have slipped 0.8 percent in the past 12 months. The stock is rated a 'buy' based on the consensus of three analysts polled by Reuters.