Michael Hill hope to regain glimmer after clearing old inventory

After a whirlwind of economic unsustainability, jewellery retailer Michael Hill (ASX: MHJ) is ready to glimmer through the turbulence with strategic manoeuvres and operational adjustments releasing their positive sales momentum in recent months. 

Bolstered by the inclusion of Bevilles stores acquired in mid-2023, overall sales in FY24 have seen a positive performance with a 3.8% increase as compared to last year. The second half of the year saw a 4.9% growth with the final seven weeks of FY24 showing an increase of 6% in Group sales across all markets and platforms, in Australia and Canada as compared to the same period last year. 

The Company anticipates a FY24 EBIT between $14 million and $16 million, in line with analyst expectations.

On February 1, 2024, Michael Hill was mandated by the Supreme Court of New South Wales in the case of Gispac v Michael Hill, concerning a dispute over packaging supply between 2014 and 2018. Ultimately, the court ordered Michael Hill to pay damages totaling $2,6 million, along with accrued interest and costs. 

Despite headwinds of trading conditions in May & June 2024, Michael Hill strategically focussed on clearing inventory to pave the way for higher-margin products in FY25. Their gross margin for FY24 is around 60.5%. With new and refreshed products, Michael Hill is expecting great profit margins in FY25. 

Managing Director and CEO Daniel Bracken said: “While challenging economic conditions have persisted across all markets throughout the year, particularly in the fine jewellery segment, the Group has continued to outperform the category, with a focus on retail fundamentals and execution of its clearly articulated strategies. Particularly pleasing was the consistent performance of our Canadian business throughout the year.” 

To cope with difficulties, Michael Hill revamped and relaunched their website which resulted in digital growth. 

“While FY24 was disappointing, and trading conditions are expected to remain challenging, initiatives are underway to drive sales and productivity, enhance margin, optimise inventory, prioritise and reduce capital expenditure to protect the balance sheet, and further embed cost conscious discipline across the business,” added Bracken.  

The debut of Michael Hill’s inaugural global flagship store in Melbourne, alongside the introduction of a fresh brand image and the appointment of Miranda Kerr as brand ambassador. Coupled with a revamped website, these initiatives underscore Michael Hill’s commitment to enhancing its brand presence and customer engagement on a global scale.

“As a key milestone of the Michael Hill brand elevation journey, April saw the unveiling of our first global flagship store at Chadstone in Melbourne showcasing the new brand codes, our first brand ambassador, Miranda Kerr, and a complete re-platforming of our website. I am extremely proud of the enthusiasm, passion and dedication demonstrated by all our team involved in the meticulous and considered delivery of such a pivotal moment for the Michael Hill Brand,” Bracken added.

To assist their working capital needs for the upcoming Christmas season, Michael Hill increased its existing debt facility by $40 million for a four-month-period, effective from September 15, 2025. Net debt is currently at approx. $40 million.

MHJ shares reached a high of $0.58 in early morning trade, which was an 8.41% increase on the previous day’s close price of $0.53.