Michael Hill International has reported a 19.6 per cent increase to its net profit after tax in its first-half of the year earnings.
The Australasian jewellery retailer banked $21.4 million in the 26 weeks to December 29, an increase on the $17.9m its posted in the same period a year earlier.
Its underlying earnings before interest and tax increased by 6.9 per cent to $31.6m.
The company attributed the increase in its earnings to increased online sales through its website, and targeted reduction in costs. Its e-commerce sales increased by 44 per cent to almost $10m in the first-half of the year.
Its statutory earnings before interest and tax increased by 34 per cent to $35.3m, compared to $26.2m posted the same time a year earlier, while total revenue for the six months to December increased by 4.4 per cent to $329.5m, up from $315.4m.
The group same-store sales were up 6.3 per cent, while its gross margin reduced to 61.7 per cent, down from 64.2 per cent in the period. This was attributed to forex and gold prices increasing.
The company will pay out an interim dividend of AU 1.5 cents a share.
"We're pleased to deliver an increase in same-store sales of 6.3 per cent, and underlying EBIT growth of 6.9 per cent in really challenging trading conditions," Michael Hill chief executive said in a statement released to the stock exchange this morning.
"The result reflects the momentum we have built and is an early validation of both the
strategy and the new management team. We remain convinced that the best way to insulate the business from external factors is a vigilant focus on retail fundamentals."
Bracken said Michael Hill was in a strong financial position despite operating in a challenged retail environment in New Zealand and Australia.
"We are navigating a challenging retail environment that requires a balanced approach
between sales momentum and margin realisation."
Michael Hill opened one new store, in Canada, and closed three under-performing stores in Australia in the six months to December. It operates just over 300 stores spread across New Zealand, Australia and Canada.
Trade in New Zealand was the strongest compared to its other two markets, with same-store sales up 6.6 per cent to $68.1m.
Same-store sales in Canada increased by 5.1 per cent to $75.1m.
While same-store sales in Australia were up 3.3 per cent, its revenue in that market declined by 0.7 per cent to $174.2m, from $175.5m.
"Recent local and global environmental factors have placed additional pressure on an already challenged consumer market. Thus far the impact on our business has been limited as we continue to monitor and mitigate issues. It's not yet clear what the cumulative impact could be on consumer confidence and discretionary spend. However, we believe we have put in place the right strategies and initiatives and it is more important than ever for us to focus on cost reduction, improving productivity across all retail segments, exploring omni‐channel growth and continually strengthening our brand proposition."