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Michael Hill Dec qtr sales fall 1.3% despite Christmas boost

Wednesday 16th January 2019

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Michael Hill International reported a 1.3 percent decline in December quarter sales, with only its Canadian business reporting improved sales in the key pre-Christmas period.

The jeweller’s latest update shows that November and December sales from continuing operations increased 2.9 percent from a year earlier, and were up 1.3 percent on a same-store basis.

But those gains were led by a 10.5 percent improvement in its Canadian sales – the firm’s second-largest market. Pre-Christmas sales in Australia, where it gets more than half its revenue, fell 1 percent, while New Zealand sales were down 1.6 percent.

Quarterly group sales from continuing operations were down 1.3 percent, and down 2.9 percent on a same-store basis. For the half-year, sales fell 4.2 percent to A$309.5 million and were 6 percent lower at A$292.7 million on a same-store basis.

Gross margins for the half held up at 62.7 percent, despite increased costs caused by a weaker Australian dollar, the company said.

Chief executive Daniel Bracken acknowledged that, despite the “significant” improvement since the first-quarter, the company had more work to do to strengthen the business and evolve its strategy.

“The company’s performance during the key November and December trading period was encouraging,” he said in a statement to NZX. “A refined approach to our event and promotional activities resulted in a lift in sales during our two busiest months. This was a good outcome in a challenging retail environment.”

Michael Hill shares last traded at 64 cents, having fallen about 52 percent during the past year.

Bracken, who only joined the Brisbane-based firm in November, is rebuilding his executive team as he implements a new strategy which was started last year to reposition Michael Hill as a “differentiated” multi-channel brand.

The company shut its decade-old US chain last year, is closing down its three-year-old Emma & Roe business, and is focusing more on on-line sales and proprietary, branded products.

Today the company said e-commerce sales at A$8.1 million were 59 percent higher than a year earlier and accounted for 2.6 percent of group half-year sales.

Branded collection sales were 11 percent higher and accounted for 20 percent of half-year group sales, up from 18 percent last year.

Today’s report shows December quarter sales in Australia fell to A$106.9 million, down 4.6 percent from a year earlier. They were down 7 percent for the half-year at A$172 million.

New Zealand quarterly sales were down 4.8 percent at NZ$41.8 million, and 5.9 percent lower for the half-year at NZ$65.6 million.

Canadian sales increased by 4.5 percent to C$49 million in the December quarter, leaving them 0.3 percent ahead at C$72.9 million for the half-year.

The firm said it had 309 Michael Hill stores at Dec. 31, having opened six new stores and shut three that were under-performing in the half.

It shut four Emma & Roe stores in the September quarter. Two stores and the website continue operating while their closure is negotiated with landlords.

On a same-store basis, those outlets delivered A$3.7 million of sales in the half-year, up 6.5 percent from the year before.

(BusinessDesk)

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