Michael Hill International has recorded annualised cost savings between $3 million and $4 million following its axing of some leadership roles across the organisation.
The axing of senior leading roles was the result of margin pressures, which dropped 370 basis points to 61.5 per cent in the first half of FY24, brought on by higher gold and diamond costs along with the company responding to heightened competitor promotional activity across the key Christmas trading period.
Inflationary pressures impacted the majority of costs across the business, most notably store labour and occupancy - the two largest cost categories.
It is not known how many roles were dropped, or in which departments. Michael Hill declined to comment further when contacted by Ragtrader.
Despite the margin challenges, Michael Hill recorded a 4 per cent lift in revenue to $362.7 million for the first half of FY24, predominately driven by growth in the Australian market, with revenue lifting in the country by 10.2 per cent to $202.3 million.
Comparable earnings before interest and tax (EBIT) was also down by 43 per cent across the business in the first half, to $31.3 million.
These figures include the company’s recently acquired business Bevilles - which now includes 30 stores across Australia, up by four at the end of the first half - as well as its Australian pureplay brand Medley.
The company also softly launched its high-end brand TenSevenSeven with an online store.
Michael Hill’s New Zealand market revenue decreased by 10.3 per cent in the same period to NZ$65.4 million (A$61.64 million).
Given the ongoing security incidents experienced in New Zealand, significant investment in security measures continued to have a direct impact on earnings of around $3 million.
Meanwhile, Michael Hill’s Canada market remained relatively flat, lifting by just 0.5 per cent to CA$88.6 million (A$99.92 million).
Group sales continued to stay elevated in the first seven weeks of 2024, up 9.5 per cent, and driven by Australian sales which were up 19.6 per cent. New Zealand sales were down 9.2 per cent while Canada sales were down 0.9 per cent.
“While the economic conditions and retail environment remain challenging in all markets, we are encouraged by our ongoing performance in Canada as a lead indicator, and early green shoots in Australia in the second half,” Michael Hill managing director and CEO Daniel Bracken said.
Bracken added that there is no doubt the first half was a challenging period for much of the discretionary retail sector.
“That being said, we were encouraged by our performance against market data within our category,” Bracken said.
“Clearly margin was under pressure from both input costs and promotional activity, and inflationary forces saw elevated costs across many aspects of the business, which together, impacted EBIT for the half.
“Notwithstanding market conditions, the business remains committed to its multi-brand group strategy, with a focus on elevating the Michael Hill brand and expanding the Bevilles network, to continue to take market share.”