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Michael Hill lifts sales 5.7% as retailers generally upbeat on Christmas

Monday 9th January 2017

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Jewellery chain Michael Hill International said preliminary results show total stores sales growth of 5.7 percent in the six months to December, bolstered by trading in the Christmas period.

Group sales from its stores in Australia, Canada, New Zealand and the US reached A$328.1 million in the first half of the year versus A$310.5 million in the same period a year earlier, Michael Hill said in a release to the New Zealand stock exchange. Same store sales were up 1 percent at A$307 million. Final first half results will be published on Feb. 17.

The company, which has the Michael Hill brand and the smaller Emma & Roe brand, said trading for the half ended on a “solid note with December’s same store sales up 2.5 percent for the month,” despite choppy macro conditions and competitor discounting.  

The Michael Hill brand delivered total store sales growth of 4.6 percent and same store sales growth of 1 percent in the six months while Emma & Roe reported total store sales growth of 72 percent and same store sales growth of 1.1 percent in the six-month period. At the end of December there were 305 Michael Hill stores trading in Australia, New Zealand, Canada and the United States and 24 Emma & Roe in Australia and New Zealand.

Looking ahead, the company said 10 Michael Hill and six Emma & Roe stores will be opened in the second half of the year, resulting in 32 new stores opening in the year versus 19 in the prior period. 

The majority of the 10 new Michael Hill stores will be opened in Canada, where it reported same store sales growth of 7.4 percent in Canadian dollars and total stores sales growth of 18 percent. The company, however, continues to struggle in the US with same stores sales down 8.8 percent in the first half.

Both Australia and New Zealand had a tepid first half result with same store sales growth up 0.3 percent in Australia and down 1.5 percent in New Zealand. However, in New Zealand “the month of December produced sales growth over last December, which was pleasing” while December “produced a solid result” in Australia, Michael Hill said.

Shares in the dual-listed Michael Hill were unchanged at $1.31 on the New Zealand stock exchange.

Several New Zealand retailers were also upbeat about the busiest month of the year and Paymark’s initial December data showed strong spending growth throughout the country, up almost 8 percent to $5.49 billion.

“I would characterise Christmas 2016 as highly competitive, clearly weather affected and not particularly easy, but we did in fact clearly trade better than last year,” said Rod Duke, managing director at Briscoe Group, which operates stores selling household items and sporting goods.

At Warehouse Group, which recently said profit may fall between 10-and-15 percent in the first half of its financial year on a weaker-than-expected run up to Christmas, the trading period itself was busy, a spokeswoman said.

“Prior to Christmas there were the last minute gifts to buy and from Boxing day we saw customers after a variety of deals. Attention then turned to summer outdoor activities with customers purchasing camping gear, outdoor furniture and paddling pools,” she said. 

Briscoe shares were unchanged at $4.05, while Warehouse fell 1.1 percent to $2.80.

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