Michael Hill’s Revenue Falls in First Half

RAPAPORT… Michael Hill’s sales fell 2.7% in the first half of its fiscal year due to the lingering impact of a discounting policy that it has been working to abolish, the company said.

Group revenue dropped to AUD 315.4 million ($226 million), the
jeweler reported Wednesday. During the first four months of the period ending
December 31, the jeweler suffered from a marketing strategy featuring heavy
discounting, which it believed lowered the value of its brand among consumers.
Same-store sales — those at branches open for at least a year — slid 6% during
the six months.

However, sales improved in the last two months of 2018 as it adjusted its strategy, with group sales increasing 2.9% for that period, while same-store sales grew 1.1%. 

“[The] move away from discounting…had a significant impact
on revenue,” the company said. “A refined approach to event and promotional
campaigns in November and December saw a turnaround in performance.”

Group profit more than doubled to AUD 19.5 million ($14
million) in the first fiscal half, versus AUD 8.7 million ($6.2 million) a year before. In 2017, the company paid one-time charges related to its store closures in the US.

Same-store sales in Australia, the jeweler’s largest market,
fell 5% to AUD 175.5 million ($125.8 million). Profit for the region dropped 6%
to AUD 110.5 million ($79.2 million).

Sales in New Zealand slipped 6% to NZD 65.8 million ($45.2
million), with profit sliding 4.1% to NZD 41.2 million ($28.4 million). Revenue
for shops in Canada rose 0.9% to CAD 74.4 million ($56.6 million). Profit for
the region went up 0.3% to CAD 46 million ($35 million).

The group opened six new stores during the period, and closed
three, bringing the total number to 311 on December 31.

Image: A Michael Hill store in Australia. (JHVEPhoto/Shutterstock)