Jeweller posts a pearler of a profit, set to launch into Canada

By NZPA

Friday 23rd August 2002

Jewellery retailer Michael Hill International increased its annual net profit by a quarter to $12.71 million, and is ready for its expansion into Canada.

The June-year profit, up from last year's $10.04 million, included a one-off gain of $408,000 from the sale of its New Zealand head office building in August, 2001.

The company said in a statement today it was the sixth consecutive record net profit.

Total sales rose to $214.11 million, from $189.17 million, boosting profit before tax and unusual items to $18.29 million from $15.13 million.

In New Zealand, same store sales rose by 13 percent. Two new stores opened, at Mt Maunganui and Taupo, bringing New Zealand stores to 43 at the end of the period.

Michael Hill's Australian operations' earnings before interest and tax rose 24 percent to $12.88 million after a slow start to the year.

Same store sales improved by 6.4 percent, while total sales were up 14.5 percent at $A109.4 million ($NZ128.7 million). Five new stores opened during the period, bringing the total to 77 stores.

The company had a conditional contract to sell its Australian head office building in Brisbane, for $A4.5 million.

The board has decided to open four stores in Vancouver, Canada, with three to be operational by November, a move flagged at its interim results.

Michael Hill planned to open four stores each year for the next four years, with an initial funding requirement of $NZ3.3 million for the first year and a total of $6.632 million over the first four years.

The Canadian subsidiary is expected to break even in the second year of operation, with the company forecasting the opening of 100 stores within the next 10 to 15 years.

"We see the Canadian expansion as the commencement of our expansion to other countries, in coming years," the company said.

"...Our decision to expand globally has been the most significant step taken by the company since expanding to Australia in 1987."

Michael Hill also planned to open three new stores in New Zealand and six in Australia this financial year.

The company will pay a final imputed dividend of 10 cents per share on October 14, bringing total dividends to 17cps for the year, equivalent to 53.3 percent of net profit.

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