Michael Hill International has reported operating revenues of $555.65 million for the year ended June 30 2015, with earnings before interest and tax of $46.47 million in line with the previous year. The group reported a net profit after tax of $30.69 million for the 2014-15 financial year.
During the year, the group achieved some key outcomes: revenue increased four per cent, reaching the $551.90 million milestone for the first time; Canadian revenue increased 14.6 per cent; and earnings increased 59.2 per cent.
A new brand positioning, “We’re for Love”, launched in February 2015.
Other highlights include inventory levels reducing on a same store basis, strong PCP sales up 12 per cent to $35.5 million; e-commerce sales increasing 122 per cent, eight new Emma & Roe boutiques opening, branded merchandise sales reaching 13.2 per cent of sales, the first store opening in New York, the opening of 14 new stores making for a total of 296 stores, net operating cash flow improving 271.5 per cent and net debt levels reducing by 20 per cent.
These accomplishments hold the group in good stead for the future, even though some of the initiatives undertaken during the year have had an adverse impact on short-term earnings and financial ratios.
The company intends to continue to build a business with increased global reach, especially in North America, and to launch a new brand campaign globally with very high profile media exposure to establish its new Emma & Roe business.
This financial year was essentially a story of two halves, with earnings stronger in the first half compared to the second half. At the half year, group EBIT was 18 per cent up on the previous period, driven by increased revenue and good margin and cost control. Second half earnings were impacted by the significant investment in the brand relaunch, and the worsening retail conditions in Australia. Due to these factors, group EBIT in the second half was $5.3 million or 53.9 per cent lower than the corresponding period the previous year.
According to the company’s chairman, Michael Hill, the New Zealand business continues to perform well while the Australian market has been more difficult in recent years, but is poised to take advantage of any upswing in consumer sentiment.
“Steady store growth continues in the Canadian market which is performing well as we continue to push into profits. The test of the US market is ongoing and we continue to make improvements to our retail model in this important market. Two further stores have been secured in the US, one in New York and the other in New Jersey, to further test our model in this lucrative market. The Emma & Roe brand continues to be trialled with a view to proving up the brand and model in the coming year. The e-commerce business continues to grow and will support an omnichannel strategy for both brands going forward. Further store openings are planned for both the Michael Hill and Emma & Roe brands in the year ahead while the Australasian retail team remains firmly focused on lifting our existing store profitability through consistent application of our world class retail selling system and continued focus on cost control.
“The directors have announced a final dividend of 2.5 cents per share (2014 – four cents), with no imputation credits attached for NZ shareholders and no franking credits for Australian shareholders.”
