Michael Hill first-quarter sales rise 9.9%, sees stable gross margin after difficult second half last year

Thursday 8th October 2015

Michael Hill International, the listed jewellery retailer, said first-quarter sales rose 9.9 percent, driven by a combination of new store openings and increased revenue from existing stores.

Sales rose to A$112.5 million in the three months ended Sept. 30, from A$100.9 million a year earlier, the Brisbane based company said in a statement. Same-store sales gained 6 percent to A$107 million.

The retailer reported weaker earnings in Australia, its largest market, in the year ended June 30, and cut its dividend for the first time in six years, yet it flagged plans to open eight more stores across the Tasman by 2018. Gross margins had been under pressure from a strong US dollar but it had taken "appropriate action" and margin "should be steady" in the latest three months compared to a year earlier, it said today, without giving details.

"The Australian market has steadied from previous reporting periods" and achieved 2.9 percent growth on a same-store basis to A$65.3 million, the company said. New Zealand same-store sales rose 8.6 percent to $23.6 million in local currency terms and Canadian stores rose 6.2 percent on that basis to C$15.7 million. US sales from stores open at least 12 months rose 1.2 percent to US$2.1 million.

Michael Hill also separately disclosed revenue for its Emma & Roe chain selling charm bracelets and accessories, which is in the second year of a trial. That business doubled sales to A$1.57 million, an uplift of 45 percent on a same-store basis.

It opened one new Emma & Roe store in the quarter, bringing the total to nine. and plans to open two more.

"This will take the brand to critical mass in the southeast Queensland market and give us the best indication of its commercial viability," the company said.

Michael Hill shares last traded at $1.04 and have dropped 20 percent in the past 12 months. It is rated a 'buy' based on three recommendations compiled by Reuters.

BusinessDesk.co.nz

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