Christmas bonus boosts Michael Hill’s earnings

RETAIL jewellery group Michael Hill has lifted earnings expectations after a “great Christmas across stores in all three countries and all three online platforms” where it operates.

The Brisbane-based group, which has 285 stores in Australia, NZ and Canada, expects earnings before interest and taxes to come in at between $49m and $53m, up from $44.6m in the previous corresponding period.

Michael Hill chief executive Daniel Bracken said strong earnings were an expected outcome after three years of a transformational journey that was only partially accelerated through the pandemic.

“There is a lot that has been done to elevate the Michael Hill brand to a more premium position in the market, including by reducing discounts, and we are seeing that validated through the sales profile of our customers,” he said.

“We’d started to see the green shoots of the strategy when the pandemic came.

“But we are still seeing higher average transaction value year on year and seeing higher conversion rates.”

The business, which has just completed its tenth positive quarter, said the pandemic had not impacted consumer buying behaviour, although past lockdowns and restrictions had impacted trade.

“Michael Hill is selling lifetime pieces, so people will wait to buy the right thing rather than just ignore it (and) move on. So I think that’s where we’ve coped better than fashion.”

For the second quarter ended December 26, the group reported strong unaudited sales growth of 9.8 per cent to $217.5m in all markets and channels despite 2381 lost store trading days.

Same store sales were up 9.6 per cent to $204.2m.

Online sales for the quarter rose 28 per cent. Year to date, digital represented 8.2 per cent of total sales compared to 6.3 per cent in FY21.

Total first half same store revenues are up 11.4 per cent to $306.5m and up 2.4 per cent to $325.1m on a total stores basis.

“The successful planning and execution of Christmas underpinned this outstanding result,” Mr Bracken said.

Michael Hill shares closed 0.7 per cent higher at $1.44.