Michael Hill sales up 9.7% in quarter

JEWELLER Michael Hill International reported a 9.7% lift in Septemberquarter sales but said margin compression continues.

Sales increased to $A124 million ($NZ132.7 million) in the period, and were up 11.9% when adjusted to reflect a new store opened in Canada and three closures in Australia, the Brisbanebased firm’s biggest market.

Growth was strongest in Canada, where sales improved 16.4% to $C27.2 million ($NZ32.3 million) on a samestore basis, and in New Zealand, where they rose 10.1% to $25.5 million on a samestore basis.

Chief executive Daniel Bracken said the sales lift in those two countries was encouraging, but he noted the retail environment remained ‘‘volatile and challenging’’.

Margin compression continued and while there were early signs of a slight recovery from the June quarter, margins had not yet recovered to historic levels, he said.

Michael Hill restructured its business last year, quitting the US and exiting its Emma & Roe subbrand to focus on highmargin sales and make better use of other sales channels, such as online.

It had 304 stores operating at September 29 — 165 in Australia, 87 in Canada and 52 in New Zealand.

Michael Hill shares last traded at 62c and have fallen about 3% this year.

The firm’s quarterly sales in Australia rose to $A68.3 million, up 2.3% from a year earlier and 6.8% higher on a samestore basis. The firm shut three underperforming stores in the period.

Mr Bracken said Australia remained ‘‘challenging’’ with discounting widespread as rivals tried to maintain market share.

Sales growth in New Zealand reflected a ‘‘strong’’ lift in market share, while the 17.6% lift in allstore sales in Canada was largely due to the firm’s productivity initiative there, he said.

Website sales across the group rose 18.9% from a year earlier, but were up 39.4% once adjusted for the closure of Emma & Roe.