Michael Hill books profit, despite US weakness

Michael Hill CEO Phil Taylor has booked a 66.8 per cent increase in net profit after tax (NPAT) to 32.6 million for the year ended 30 June, amid a repositioning of its Emma & Roe brand and the introduction of proprietary lines to Michael Hill.

The company recorded a 5.8 per cent increase in revenue to $582 million for the year, while earnings before interest and tax (EBIT) was up 2.3 per cent to 48.1 million.

As it advised the market in July, comparable sales were up 1.5 per cent across the group, with 8.8 per cent same-store growth in Canada and 1.2 per cent growth in Australia driving the positive result.

Taylor told investors on Monday morning that the introduction of proprietary lines into Michael Hill would cause some short-term pain for the company, including capital expenditure associated with design and margin pressures due to the clearance of old stock.

He is, however, confident that the new “collections” range will be a pillar of the brand’s future growth, providing it with a key point of differentiation in the market and more flexibility around fashionability – an area of the market that’s growing relative to the traditional fine segment.

“We do have a commitment to the branded collection strategy, we see it as the major differentiator for our brand in the mid-market,” Taylor said.

“The flipside to that is that we need to make space for that in the store as well as funding that via capital requirements,” he continued, referencing a 35 per cent increase in capital expenditure for the year to $33.1 million, which was also impacted by legal costs from the last calendar year.