Michael Hill lifts first-half sales on North American growth

Friday 9th January 2015

Michael Hill International, the jewellery chain bearing the name of its founder, lifted first half sales 3.9 percent as growth in its target North American market offset a weak Australian trading environment.

Sales across all store rose to A$279.3 million in the six months ended Dec. 31 from $268.9 million, and were up 0.8 percent on a same store basis, the Brisbane based company said in a statement. That growth was led by a 24 percent lift in its United States segment to A$6.8 million and a 16 percent gain in Canadian sales to A$45.9 million, where the retailer has been seeking to gain traction as the North American economy climbs out of the rut caused by the global financial crisis.

On a local currency basis, Michael Hill's Canadian stores lifted sales 19 percent across all stores and 4.4 percent on a same store basis, while US sales grew 18 percent and 9.1 percent.

The Canadian segment "continued to experience solid growth" and the US "achieved strong growth," the retailer said. "However, Australia continued to be a difficult market."

Michael Hill's Canadian store footprint surpassed New Zealand's last year and is on track to reach 100 outlets in coming years, and the retailer is focusing on the top 100 malls in the US as part of its North American growth plan, which it sees as eventually supplanting its stronghold Australia and New Zealand.

The chain added eight stores in the period while closing one, and had 285 outlets as at Dec. 31.

Its Australian unit continued to lag, reporting a 0.7 percent decline in sales across all stores to A$168.6 million, and was down 2.1 percent on a same store basis. Australia's economy has hit a lull as it comes to grips with the prospective end of its decades-long resources boom and as the Federal government embarks on an austerity plan to get its books back in surplus.

The New Zealand unit lifted sales 7 percent to A$58 million in the half across all stores, and 7.4 percent on a same store basis. In New Zealand dollars, sales rose 3.8 percent across all stores and 4.1 percent on a same store basis.

The trading update doesn't include results from Michael Hill's new Emma & Roe branded stores, which aim to generate a higher frequency of purchase with lower value items.

Michael Hill will report its first half result on Feb. 13.

The shares last traded at $1.15, and sank 16 percent in 2014.

BusinessDesk.co.nz

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