Shutdowns Send Michael Hill’s Profit Sliding

RAPAPORT… Michael Hill’s earnings slumped 81% in the last fiscal year amid the temporary closure of most of its 290 stores in the second half.

The Australia-based jeweler reported profit of AUD 3.1 million ($2.3 million) for the fiscal year ending June 30, as stores remained closed for a period of five to 13 weeks to stem the spread of the coronavirus. Group revenue fell 14% to AUD 492.1 million ($357.3 million).

“The Covid-19 closures had a severe impact on headline sales and profit,” Michael Hill CEO Daniel Bracken said Wednesday.

Same-store sales — at branches open more than one year — rose 2.7% to AUD 469.3 million ($340.7 million). This partly came from a strong jump in digital sales, which increased 55% to AUD 24.7 million ($17.9 million) as shoppers moved to online purchasing while stores were shut. Michael Hill also saw positive results from the new retail model it implemented in the beginning of the year, in which it moved away from a discounting strategy.

The company plans to build on its digital success through the launch of an online-only brand called Medley.

“This offers us a real opportunity to expand into the high-margin demi-fine category, attracting a new customer demographic,” Bracken noted.

Image: A Michael Hill store in Australia. (Michael Hill)