Michael Hill International has more than doubled first-half profit to $19.5 million after what the jewellery chain’s chair called ‘a series of challenging but necessary changes’ that included store closures.
Profit for the six months to December 31 rose from $8.7 million in the prior corresponding period, when the company was hit by the cost of exiting the US and closing its Emma & Roe chain.
Total revenue from ordinary activities slipped 2.7 per cent to $315.4 million after the company shifted its strategy away from discounting.
The company said the shift hurt its Australian segment the most, with the changes to discounting contributing to a 5.1 per cent fall in the nation’s total revenue to $175.5 million.
‘The company made a series of challenging but necessary changes over the past year, as it transitioned to a new strategy focused on the core Michael Hill brand and long-term sustainable growth,’ chair Emma Hill said in a statement on Wednesday.
‘A more integrated approach to our promotional and sales activities was made ahead of the Christmas trading period, which resulted in a strong turnaround in sales momentum across November and December, but not at a sufficient level to offset the lower trading volumes experienced in the four months prior.’
Moving forward chief executive Daniel Bracken said the company had much work to do, adding its executive team was ‘not satisfied with this performance’ and admitting the ‘dramatic’ shift away from discounting had not been helpful.
‘We tried to, arguably quite aggressively, wean ourselves off discounting and it remains a core theme of our strategy going forward,’ he said.
‘But … we are operating in some volatile retail environments and we are having to pull the promotional strategy hard at times to deliver the sales results that we need for the business.’
Mr Bracken, who came to Michael Hill via a stint as chief executive of Specialty Fashion, outlined his plans to grow the company, beginning with a $5 million annualized cost reduction program in January to restore the group’s financial performance.
Michael Hill also plans to modernise its business and capitalise on new growth opportunities in markets like Canada.
Michael Hill shares moved up 8.11 per cent, or 4.5 cents, to 60 cents at 1155 AEDT on Wednesday.
MICHAEL HILL SLIMS DOWN AND RETURNS PROFIT
* Net profit up to $19.531m
* Revenue down 2.7pct to $315.445m
* Interim dividend of 2.5 cents per share, unfranked