Michael Hill CEO and managing director Daniel Bracken is looking towards Christmas with confidence as the group reports strong trade in the first 14 weeks of FY25.
Despite a snag in its New Zealand market, where sales fell by 4.8 per cent, the group overall reported a 4.3 per cent lift in revenue driven by its other key markets Australia and Canada.
Australia led the way with a sales boom of 6.5 per cent across all stores, with same store sales up 6.3 per cent. Meanwhile, Canada sales lifted by 5.7 per cent in all stores and 4.7 per cent in same stores.
Michael Hill also recorded group gross margin recovery after a lashing in FY24, when higher input costs for both gold and mined diamonds remained elevated - combined with heightened competitor activity - resulting in a gross margin of 60.6 per cent. This is down from 64.2 per cent in FY23.
Product and brand initiatives reportedly drove the margin recovery through 2024, along with a deliberate focus on clearing inventory to make way for newer and higher margin product in FY25, alongside price lifts to reflect inflated gold raw material costs.
“As we prepare for the all-important Christmas trading period, the positive momentum we have seen in the first 14 weeks is very encouraging,” Bracken said. “I’m particularly excited about the launch of our new Pendant Bar concept, providing a unique gifting proposition for Christmas.
“Couple this with next week’s launch of our new campaign – ‘It’s a Michael Hill Christmas’, together with our best-in-class instore visual merchandising and focused retail execution from our teams, I’m confident that we are well-placed for the critical Christmas trading period.”
Bracken also shared an update on the group’s ongoing strategic objectives at the business' AGM today, including the brand overhaul of Michael Hill, the scaling of Bevilles and the launch of its new high-end brand TenSevenSeven.
Matched with digital and data investments and the opening of Michael Hill’s Chadstone global flagship, Bracken confirmed these pushes resulted in a closing net debt position of $39 million.
Michael Hill also manages fashion-forward jewellery brand Medley.
“With each brand uniquely positioned for their target customer segments, and with both product and brand propositions established, the group will be well-placed to grow revenue and profits through a more productive and expanded distribution network,” Bracken said.
“For Michael Hill, store productivity has proven to be a key lever of growth over recent years and as the brand continues to attract new target customers, it is anticipated that this will continue. This will be further supported by incorporating elements of the ‘store of the future’ design in new store fitouts and refurbishments.
“As the network aligns over time to the elevated product proposition, and with the continued focus on brand evolution, it is expected that average transaction values will continue to remain high to support revenue growth.”
The chief executive added that the brand refresh of its direct-to-consumer digital platforms will deliver improved customer experience and conversion rates “which, in conjunction with investments in data and insights, will increase productivity across all channels.”
“Gross margin recovery will be a key focus, underpinned by product evolution, increased penetration of higher margin product, category mix and leveraging the Brilliance by Michael Hill loyalty program.
“Beyond the brand’s leading position in bridal, promoting other key milestone moments like birthdays and anniversaries, provides significant revenue opportunities for the business. While leveraging the data in our loyalty program and growing the opportunities with self-purchasing customers.
“Even with the challenging trading conditions in the fine jewellery sector, the business has held firm on its strategic intent to grow the footprint and strengthen Bevilles’ position in the market.”