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Michael Hill International

By Dan Stratful

Tuesday 24th April 2012

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Michael Hill International (NZX: MHI ) is a well run retailer and it proved a lot of people wrong when it reported its first half results for the 6 months ending 31 December 2011 (1H).

1H revenue improved 7% to $289 million and net profit increased 11.5% to $26.3 million, as investors scratched their heads wondering how a retailer of luxury goods can report an increase in profit during tough global retail conditions.

Same store sales were up 1.7% in the 1H and 7 new stores were opened and 1 closed. The Canadian operations performed particularly well reporting a 21% increase in revenue to CAD$24 million and the operating surplus surged 203%. New Zealand same store sales increased by 9%, Australian fell 1.5% showing a continuing slowdown in that market, the US showed a 22% increase and Canadian same store sales increased 5%.

This was a good result overall and showed that the North American operations performed well and New Zealand also performed well.

Australia showed a slowdown, in line with other retailers who have reported tough trading conditions in Australia.

An interim dividend of 2c per share will be paid but MHI reports that it will unlikely impute dividends in the foreseeable future due to recent restructuring.

MHI began with its first store in Whangarei in 1979 and has since grown to become a global jewellery chain. Today it has 52 stores in New Zealand, 149 in Australia, 35 in Canada and 9 stores in Chicago, USA.

Status: HOLD

MHI’s shares today traded at $1.05

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232,
**A disclosure statement is available, on request and free of charge.

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