Michael Hill profit drops 86 per cent
The closure of a brand targeted at younger customers, Emma & Roe, and the exit from the US market has cost jewellery retailer Michael Hill International $25.5 million, plus reduced sales after the closures were announced.
The retailer reported an 85.9 per cent drop in profit in FY18 to $4.6 million, down from $32.6 million in FY17.
The period was said to be one of “recalibration and repositioning for the group”, according to Michael Hill chief executive Phil Taylor.
“While the costs of exiting these businesses had a material one-off impact on the financial result, Michael Hill is a stronger and more resilient business today with a clear strategy for long-term growth,” Taylor said.
“The company also made significant progress on its strategy to reposition Michael Hill from a traditional retailer to a differentiated omnichannel brand.”
Taylor noted that the company’s investment in e-commerce resulted in strong growth in online sales, increasing by 57.4 per cent to $10.3 million, now accounting for 1.8 per cent of total group revenue.
Group revenue increased to $575.5 million, up 4.4 per cent year over year, compared to $551.1 million in FY17.
The company’s Australian arm increased revenue by 1.2 per cent to $325.7 million, with earnings before interest and tax reducing to $48.6 million from $51.7 million the year prior.
During FY18, the board conducted a strategic review of the business in order to identify performance improvements and opportunities, and solidified five strategic shifts the be made during FY19, including a focus on omnichannel retailing, customer loyalty, unique branded collections, brand position and operational excellence.
The changes will require $25 million to cover new and refurbished stores, IT systems, tools and infrastructure.
Michael Hill is committed to opening a minimum of 10 new stores across Australia, New Zealand and Canada in FY19.