Despite concerns about the rising interest rates and cost of living, that somehow hasn’t stopped Australians buying jewellery as Michael Hill International (ASX: MHJ) has bucked the retail sector trend with rising revenue and stronger margins.
The June quarter was expected to be the one hardest hit for retailers with consumer confidence at its lowest point since the start of the pandemic but that definitely wasn’t the case for Michael Hill which reported $135.7m in sales for the June quarter, up 17% on the previous corresponding quarter. Making the sales growth even more remarkable was the fact it was delivered from 280 stores which was 5 less than the same time last year as prudent capital management led to the closure of underperforming stores.
“I’m delighted with our full year trading results, despite the continued backdrop of COVID disruptions and the resulting loss of 10,000 store trading days, we have delivered the highest sales and margin in the history of the Michael Hill brand,” said Michael Hill International Managing Director, Daniel Bracken.
“As we leverage our transformation strategy to accelerate growth, all markets and channels achieved strong same store sales and sustained margin expansion.”
With the strong June quarter, it takes Michael Hill’s FY22 full year revenue (52 weeks ended 26 June 2022) to $592.5m – a 7.3% increase on FY21. From that, the Company expects EBIT to fall in the range of $60m – $63m which would be up from last year’s $56.6m.
Since the start of the pandemic when retail stores were severely impacted by the loss of foot traffic, Michael Hill accelerated its digital strategy that created omni-channel sales opportunities. These non-traditional channels that include marketplaces and click-and-collect services generated $40m for FY22, a 23% increase on last year. Digital sales now account for 7.1% ($9.6m) of total sales.
“This result marks our twelfth quarter of positive same store sales growth since FY19Q3, which is a remarkable achievement considering the ongoing challenges of a global pandemic. These results reaffirm our continuing journey to elevate the Michael Hill brand through our marketing, our product, our stores and our people.
“With both the ongoing challenges of COVID and an uncertain economic environment, the business will continue to prioritise key strategic initiatives across loyalty, retail fundamentals and digital expansion, while maintaining an elevated focus on capital investment opportunities.”
Michael Hill International will report their full audited accounts in August having last year reported net profit after tax of $45.3m. That did, however, include $12.4m claimed from Australia’s JobKeeper government assistance program.
Based on the unaudited results, Australian operations accounted for $303.4m of Michael Hill’s sales (51.2%) followed by Canada’s $157.4m (26.6%) and New Zealand with $125.1m (21.1%).
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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