Michael Hill won’t repay subsidy, despite profits
Jeweller Michael Hill said its firsthalf profit lifted significantly, prompting it to bring forward the payment of a A$5.8 million (NZ$6.1m) dividend it suspended last year due to Covid-19.
Michael Hill said it would post a pre-tax profit of A$56m-A$60m for the first half of its financial year to December 27, 2020. At the higher end of the range, that is almost double the A$31.6m it reported in the same period a year earlier.
The profit was helped by A$15m of wage subsidies from the New Zealand, Australian and Canadian governments. New Zealand paid the company $3.6m, according to government data.
Excluding the subsidies, the company expected to post a pre-tax profit of A$41m-A$45m, up as much as 42 per cent from the year before.
Michael Hill said same-store sales rose 6.3 per cent to A$312.1m in the first half, with profit margins up 150-250 basis points, helped by a 102 per cent jump in online sales.
Given the company’s first-half trading performance and ‘‘significant’’ cash position at the end of the half, Michael Hill brought forward payment of last year’s first-half dividend that it suspended due to the uncertain economic environment during Covid-19.
The dividend of 1.5 Australian cents per share, originally scheduled for payment in March 2020, had been deferred until September this year.
It will now be paid on January 29 to shareholders who held the stock on March 31, 2020.
The company did not pay a final dividend for the 2020 year.
The jewellery company was founded by Michael Hill in 1979 and
he remains on the board of directors, with daughter Emma presiding as chair. The Hill family is the largest shareholder in the company, with interests in about 187 million shares, according to the latest annual report. Those shares will accrue about A$2.8m from this month’s dividend payment.
Retailers who faced uncertain times at the start of the pandemic have since largely bounced back, prompting some such as Briscoe Group and The Warehouse Group to repay subsidies.
Michael Hill would not pay the subsidy back, a spokesman said.
The jewellery chain has said it was impacted severely by Covid-19, with the temporary closure of all its stores, leading to an estimated A$80m of lost revenue and an 80 per cent slump in last year’s after-tax profit to A$3.1m.
‘‘They really needed to have those wage subsidies,’’ the spokesman said. ‘‘They have done the right thing by passing it through completely to the team and then when they were not eligible, they selffunded a wage subsidy to support the team, so I think they feel they have done enough.’’
To counter the impact of Covid-19 on its physical stores, Michael Hill has boosted its online service, offering virtual consultations and trying on of jewellery, as well as contactless pick-up, and shipping from stores.
‘‘Following a strong first five months, it was particularly pleasing to see all markets deliver positive same-store sales growth for the allimportant Christmas trading period,’’ said chief executive Daniel Bracken. A strong trading performance and a focus on cost had delivered material profit growth ‘‘in spite of challenging trading conditions worldwide,’’ he said.
Australian same-store sales jumped 12 per cent to A$174.2m, while New Zealand sales lifted 2.8 per cent to $68.4m and Canadian sales advanced 3.6 per cent to C$70.3m (NZ$75.4m).
Shares in Michael Hill jumped 6.9 per cent to 73 cents in midday trading on the NZX.
‘‘They really needed to have those wage subsidies.’’
Michael Hill spokesman