Despite "disappointing" results, Michael Hill is optimistic for year ahead

Despite "disappointing" results, Michael Hill is optimistic for year ahead

A transitional period and challenging market conditions have taken the sparkle out of Michael Hill's (ASX: MHJ) FY19.

Group operating revenues were down slightly to $569.5 million while underlying earnings also dropped 13.7 per cent to $34.6 million.

Michael Hill's FY18 net profit result was adjusted down to $1.6 million to account for remediation and backpay costs to employees of up to $25 million. This is the main reason why FY19 profits increased to $16.5 million.

CEO Daniel Bracken says although the group isn't happy with its financial performance, steady sales look promising despite a challenging retail environment.

"Whilst we are disappointed with the financial result, we have finished the year with positive sales momentum and reduced inventory," says Bracken.

"The pace of change has been intense this year with a greater sense of urgency and determination to deliver, which is really infectious."

"I'm proud that we have been able to improve sales momentum despite challenging trading conditions in our key market."

Michael Hill opened ten new stores and closed eleven underperforming locations during the year.

The company also shifted away from its aggressive discounting strategy which, in the short term, lessened same store sales by 3.3 per cent to $524.7 million.

However, the move is expected to have long term benefits.

Michael Hill says there is no indication the Australian retail environment will improve in FY20, but the company is nevertheless focused on improving its in-store retail experience, creating new products, managing a strong property portfolio and continuing to grow revenue.

"I'm confident in the coming year we are well positioned to deliver improved performance as our new operating model gathers pace, new product is introduced and our investments in our digital and IT infrastructure start to bear fruit," says Bracken.

"The focus will continue to be on retail fundamentals and strong execution in store and online."

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

 

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Crypto staking: a new way to earn passive income
Partner Content
You may be familiar with traditional ways of earning passive income such as trading sto...
Etoro
Advertisement

Related Stories

‘Devastated’ boss of collapsed Pivotal Homes warns that risk has swung against builders

‘Devastated’ boss of collapsed Pivotal Homes warns that risk has swung against builders

The devastated boss of collapsed Gold Coast homebuilder Pivotal Hom...

St Baker affirms commitment to Novonix as he exits board to focus on new fund

St Baker affirms commitment to Novonix as he exits board to focus on new fund

Rich lister and power industry titan Trevor St Baker, the largest i...

PEXA purchases 25 per cent stake in AI fintech company Elula

PEXA purchases 25 per cent stake in AI fintech company Elula

In a bid to bolster its fintech offering, online property exchange ...

Telus why: $1.2 billion takeover of Appen revoked “without explanation” after just eight hours

Telus why: $1.2 billion takeover of Appen revoked “without explanation” after just eight hours

It took just eight hours for Canadian telco giant Telus to revoke i...