Michael Hill profit shines amid jewellery doom and gloom
MICHAEL Hill International has defied a slow down in the jewellery sector to post a double digit hike in profit as it launched a new loyalty program and expanded new products such as laboratory grown diamonds.
The Brisbane-based retailer said net profit in the six months to the end of December increased 19.6 per cent to $21.4 million on a 4.4 per cent increase in revenue to $329.5 million.
Michael Hill chief executive Daniel Bracken said the company was navigating a difficult retail environment with three underperforming stores closed in Australia during the period.
"Recent local and global environmental factors have placed additional pressure on an already challenged consumer market," said Mr Bracken, referring to bushfires and the spread of coronavirus. "It's not yet clear what the cumulative impact could be on consumer confidence and discretionary spending."
The company, which has 304 stores across Australia, New Zealand and Canada, was countering the tough retail market with the launch of new loyalty and customer satisfaction programs. It also was introducing laboratory grown diamonds in all its market after being the first major jeweller in Australia last year to launch an alternative to mined diamonds.
Mr Bracken said Michael Hill was in a strong financial position with no net debt, lower inventory levels and improving turnover of stock.
"We remain convinced that the best way to insulate the business from external factors is a vigilant focus on retail fundamentals," he said.
Michael Hill shares rose 1¢ to 58¢ on Wednesday.
The company declared an interim dividend of 1.5¢, down from 2.5¢ in the previous first half.
The 103-year-old Wallace Bishop chain has closed two stores recently after amassing losses of $15 million over two years and being warned by its auditors that it may not survive the brutal down in the retail sector. In January popular jewellery and accessory chain Colette was placed into voluntary administration blaming the country's dire retail climate.