Sharechat Logo

Michael Hill 1H earnings in line with guidance; invests in US bridal trial

Friday 14th February 2014

Text too small?

Michael Hill International, the jewellery chain that bears the name of its founder, posted first-half earnings that met its guidance of last month after lifting sales while investing in a trial of bridal products at its North American outlets.

Earnings before interest and tax was A$29.7 million in the six months ended Dec. 31, from A$28.6 million a year earlier, the Brisbane-based company said in a statement. Sales rose 9.8 percent to A$270.8 million.

Net profit dropped about 26 percent to $16.2 million, mainly reflecting a more-than doubling in the company's tax expense to $12.2 million. The company has made a provision related to its negotiations with the Australian Tax Office over the restructuring of intellectual property between its New Zealand and Australian units in 2008.

Revenue in Australia, the company's biggest market with 166 stores, rose 5.5 percent to A$172 million and the operating surplus increased 3.6 percent to A$29 million. Same store sales rose 1.4 percent.

Michael Hill recorded a net operating cash outflow of A$2.3 million in the first half, from an inflow of A$22 million a year earlier, mainly reflecting "significant additional inventory" built up as part of the trial of a new bridal range in US stores and some Canadian stores, it said.

The bridal range was key to the company's North American expansion and directors were confident it would produce returns in years to come, although it was too soon to comment on the results, it said.

Sales at its US stores fell 8.4 percent to US$5 million in the first half after it closed one of its nine outlets. The operating loss was US$559,000, from a loss of US$1.27 million a year earlier.

In Canada, sales jumped 29 percent to C$37.9 million, and the operating surplus rose to C$2.85 million from C$1.56 million. Same store sales growth increased to 7.9 percent from 3.8 percent and the company said it has now reached a "critical mass" of stores.

New Zealand sales fell 3.5 percent to NZ$60.9 million and the operating surplus slipped 4.5 percent to NZ$12.4 million. Same store sales fell 4.1 percent.

Sales from the retailer's professional care plan business were A$17.6 million, up from A$14.2 million a year earlier. Deferred revenue carried forward on the balance sheet rose to A$49 million from A$35 million.

The company will pay a first-half dividend of 2.5 cents a share, unchanged from a year earlier, on April 1, with a record date of March 24. Dividends aren't imputed and likely won't be for some years because of the company's internal restructuring in 2008, it said.

The shares last traded at $1.40 on the NZX and have gained 15 percent in the past year. The stock is rated a 'buy' based on two analysts polled by Reuters.

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Unions gearing up to oppose 'market tests' on Fair Pay Agreements
Mandatory farm plans scorned as 'tick box' exercises
Kiwi dollar firms on weak US retail data, capped by rate-cut expectations
17th October 2019 Morning Report
SkyCity hoses down union claims over potential job losses
OPINION: Fair Payment Agreements and 'swallowing vomit' - the lot of the CTU
MARKET CLOSE: NZ shares gain; Restaurant Brands climbs on upbeat outlook
NZ dollar stalls after Bascand's rate cut comments
Bascand says RBNZ will consider changing bank capital proposals
Affordable electricity key to decarbonisation - Genesis

IRG See IRG research reports