US operations weigh on Michael Hill

Michael hill 2

Jewellery chain Michael Hill (MHJ) has booked modest sales growth for the first-half of fiscal 18, but continues to be weighed down by the performance of operations in the US and trial venture Emma & Roe.

In a post-Christmas trading update delivered to the market on Friday morning, MHJ said its unaudited group revenue increased by 4.7 per cent to $341.5 million for the six-months ended 31 December.

Same-store sales across the group increased by 0.5 per cent, driven by a 3.4 per cent increase in same-store sales in New Zealand and a 4.8 per cent increase in Canada, while Australian sales remained relatively flat, declining 0.1 per cent.

But operations in the United States, which CEO Phillip Taylor has previously said will be hard to justify without a turnaround, have continued to perform poorly, with same-store sales down 10 per cent.

Similarly, despite continued investment driving a 20.1 per cent increase in total sales for personalised charm-jewellery brand Emma & Roe, same-store sales declined by 5.4 per cent.

E-commerce sales, a highlight for many retailers over the holidays, increased by 71 per cent to $5.6 million during the half.

Taylor said he was generally satisfied with holiday trading across the group, given ‘difficult’ retail conditions across its operating markets.

“We’re satisfied with the result generally, especially given the difficult retail conditions across all markets. Naturally we would have liked stronger sales in our largest market of Australia, but it has generally performed well over the last 12 months,” he told Inside Retail

Taylor added that he expects the prevailing macroeconomic conditions weighing on the sector to broadly continue over the next twelve months.

“Conditions will continue to be similar in 2018, but believe that our brand is becoming sufficiently differentiated in the market place to stand up to the challenging conditions and provide some growth in 2018.”

The company said it is continuing to monitor its US segment and has nearly completed a brand-review for Emma & Roe which was flagged last July.

14 MHJ stores and one Emma & Roe store were opened during the period, bringing the total network to 347, comprising 30 Emma & Roe stores and 317 MHJ stores.

Strong performance in Canada has made it the subject of the most investment in the last six-months, with seven stores opened during the half, bringing MHJ’s total to 83 at the end of December.

The company is expected to release its audited half-year figures, which may revise preliminary December trading data, in the coming weeks.


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