New Zealand-born jewellery group Michael Hill International managed to swing back from a sales fall in the first half of FY25, with the first seven weeks of the second half in positive territory overall.
In the first half, total sales fell by 0.7 per cent to $360.2 million, driven down by a sales slump in New Zealand.
On a same store sales basis (in local currency), the group’s Canada market grew by 2.7 per cent, with Australia up 0.6 per cent and New Zealand falling by 7.8 per cent.
Michael Hill reported that the fall in New Zealand comes amid continued adverse impacts from challenging economic conditions affecting consumer confidence, declining foot traffic, and a slower return of international shoppers.
The sales slip has has since recovered in the second half, with group sales up 1.7 per cent for the first seven weeks of 2025. Same store sales were up 3.2 per cent in the same period.
Same store sales in local currency were up 3.8 per cent in Australia, 6.7 per cent in Canada, with New Zealand down by only 1.9 per cent.
As well as the Michael Hill brand, the group also manages Bevilles, Medley and TenSevenSeven.
“As always, I am very proud of our team for their retail execution, determination and resilience in an incredibly tough trading environment,” Michael Hill managing director and CEO Daniel Bracken said.
“The business is clear on its strategic priorities and targeted cost out initiatives and will be wellpositioned for when the economic cycle recovers.
“And pleasingly, the first seven weeks of the second half are very encouraging with signs of strong positive sales momentum, particularly in Canada.”
Returning to the first half, Michael Hill’s group gross margin improved to 61.3 per cent for the half, in line with previous guidance and up on FY24 of 60.6 per cent. Michael Hill cited product and brand initiatives which are offsetting higher input costs and aggressive retail trading conditions.
Gross margin was also reportedly enhanced by the introduction of higher margin gifting products that increased transaction volumes for the key Christmas period.
Comparable earnings before interest and tax (EBIT) was $24.1 million, down from $31.3 million in the first half of FY24, but at the upper end of previous guidance.
Bracken said whilst the overall EBIT result for the half was disappointing, the business was comping record prior year sales in both October and November, with eight fewer stores.
“Our gross margin is improving, underpinned by product and brand initiatives, despite the headwinds of elevated gold prices, Bracken said. “Furthermore, the business is committed to delivering cost reductions through the second half.”
For the Michael Hill brand, seven stores were permanently closed – five in Australia and 2 in Canada – while two stores were converted to Bevilles and one new New Zealand store was opened, taking the Michael Hill network to 256, led by Australia.
For the half, the Bevilles’ store network across Australia expanded to 38, with two additional conversion stores.
The total group network was 294 stores at the end of the half across all markets, from 300 at June 2024.