Michael Hill tough as diamonds in second quarter despite lost trading days

Michael Hill tough as diamonds in second quarter despite lost trading days

Jewellery retailer Michael Hill (ASX: MHJ) has seen sales rise during the second quarter of FY22 even though it lost more than 2,000 store trading days during the period due to COVID-19 disruptions.

As such, the company expects 1H22 earnings before interest and tax (EBIT) in the range of $49 million to $53 million, representing an uplift from the same time last year when it was $44.6 million.

For the quarter, group all-store sales were up 9.8 per cent despite 2,381 lost store trading days, and same store sales were up 9.6 per cent against the prior year.

The results reflect research compiled by ANZ (ASX: ANZ), which noted in its spending data wrap-up that while spending was down overall in late 2021-early 2022, the jewellery sector remained sturdy - witnessing a spike of 43 per cent.

For Michael Hill’s Australian operations, same store sales were up 5.2 per cent in the quarter even with 38 stores in New South Wales, 29 in Victoria, and four in the ACT temporarily closed for between two to five weeks during the period.

The same trend was witnessed in Michael Hill’s international operations, with same store sales in New Zealand up 13.4 per cent, and up 11.2 per cent in Canada.

“The successful planning and execution of Christmas underpinned this outstanding result – I couldn’t be prouder of the entire team. From the highly engaging and emotive marketing campaign, to the deployment of new digital initiatives, excellence in supply chain and inventory management and our Christmas recruitment strategy, all came together to deliver Michael Hill’s best Q2 in the Company’s history,” Michael Hill International managing director and CEO Daniel Bracken said.

“I’m particularly pleased with the result we have delivered considering the significant store closures due to Delta across NSW, VIC and Auckland during October and early November. And as we now enter 2022, the new Omicron variant is bringing new challenges across our Australian and Canadian network, both in terms of impacts on our team members and consumer confidence and behaviours.

“This strong performance now marks our tenth quarter of positive same store sales growth since FY19Q3 and further demonstrates the success of the continued transformation of the Michael Hill brand. This result also demonstrates our strategic initiatives are driving both sales and margin growth, which will be further enhanced by our capital management strategy.”

Shares in MHJ are down 1.75 per cent to $1.40 per share at 10.17am AEDT.

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