An increase in same store sales at Michael Hill's Australasian stores has seen the jeweller post a 53.9% increase on net profit before tax for the half year.But the company is still facing heavy resistance in its push into the North American market, with
An increase in same store sales at Michael Hill’s Australasian stores has seen the jeweller post a 53.9% increase on net profit before tax for the half year.
But the company is still facing heavy resistance in its push into the North American market, with same store sales in Canada down 5.1% in the six months and a bigger loss in the United States.
Overall revenue for the six months ended December was up 7.9% to $244.9 million, after improved trading conditions during the key Christmas trading period saw same store sales rise from flat to 4.5%.
Net profit before tax was up 53.9% to $27.54 million and while there was a 66% drop in after-tax profit, the previous result included a $53 million tax credit.
Earnings before interest and tax were also up 42.3% to $30.33 million.
The result has seen an interim dividend of 1.5cps announced, a 0.5cps increase on the first half of 2009.
Australasian increases
On a same store level, the jewellery chain’s brightest performance was in its 53 local stores, with New Zealand same store levels up by 5.5%, a complete turnaround from the 9.3% decrease seen in the first half of 2009.
New Zealand revenues were up by 5.7% to $52.41 million for the six months, although ebit fell 4.9% to $9.4 million.
Despite the improved result, the company has warned that retail sales were still difficult to make and margin continues to be under pressure, while further expense was also added due to an increase in the use of finance plans to help generate additional sales revenue.
Meanwhile, Michael Hill’s same store sales across the Tasman were up 3.6% for the six months, after a 1% increase in the same period last year.
Australian revenue was up by 6.2% to $A132.8 million, although the operating surplus as a percentage of revenue remained flat at 18.4%.
The company said it was pleased with the result in the current climate, with two new stores opening, although two under-performing stores also shut up shop to keep numbers stable at 143.
North American blues
Michael Hill’s 29 Canadian stores did see a 16.3% increase in revenue to $C16.2 million and while same store sales were down by 5.1%, this was still an improvement on the previous period’s drop of 10.7%.
Canadian retail operations are still staying out of the red, with a modest operating surplus of $C0.15 million, compared to a surplus of $C0.32 million last year.
While trading conditions in Canada are as difficult as anywhere else, the company did open three more stores during the past six months.
Further south, and the relatively new US business – where Michael Hill has 17 stores – recorded revenue of $US5.3 million for the six months.
But it posted an operating loss of $US2.9 million, almost three times the loss from the previous corresponding period of $US1.0 million.
However, with the business only acquired in September 2008, the company said its US operations were still in their infancy and the management team was focused on adapting its retail formula to the US market.
