Jeweller Michael Hill International has flagged a drop in half-year earnings of between 23% and 28% due to challenging trading conditions.
Michael Hill said earnings before interest and tax (EBIT) for the 26 weeks ended 29 December 2024 were expected to be between A$22.5 million and $24 million, compared with $31.3 million in the same period a year earlier.
The company, which sells engagement rings, necklaces, bracelets, earrings, and watches in Australia, New Zealand and Canada, said group sales for the half year were down 1% to $359.1 million and flat on a constant currency basis.
On a same store basis in local currency, Canada delivered another record sales performance with 2.7% growth, Australia was up 0.6% while New Zealand was down 7.8% as it continued to be adversely impacted by economic conditions.
“The prevailing macroeconomic pressures continued to impact consumer sentiment and discretionary retail trading conditions throughout 2024, with conditions in New Zealand particularly challenging,” Michael Hill International said in an announcement to the Australian Securities Exchange.
Product and brand initiatives, including the successful launch of Michael Hill’s “Pendant Bar” concept and “LAB”. offering, were continuing to underpin an improving gross margin, which offset higher costs and more aggressive retail trading conditions.
Digital sales, representing 8% of total sales, had continued to grow, supported by strong digital traffic and deployment of Australian jeweller Bevilles’ ‘omniinitiatives’, and inventory levels remain well-managed.
Managing Director and CEO Daniel Bracken said flat sales for the half reflected a strong business performance in the first three months which offset more challenging trading conditions at the beginning of the second quarter.
“Whilst we are disappointed with our overall sales result for the half, the business was comping record prior year sales in both October and November, with eight fewer stores,” Bracken said in the announcement.
Michael Hill International (ASX/NZX: MHJ) shares closed down 0.5 cents (0.92%) at 54 cents on Thursday, capitalising the company at $205.88 million.