Morningstar says it lacks sufficient brand strength and cannot sustain excess returns over a long period.
Michael Hill claimed tax deductions of $31 million between 2009 and 2013.
Sales rose to $A112.5 million in the three months ended September 30.
Eponymous mogul will now design for company rather than lead it.
Retail reporting kicks off tomorrow amid a weakening New Zealand outlook and tough Australian trading conditions.
The 2015 annual dividend will fall to 5c per share, from 6.5c in 2014.
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