Michael Hill sales fall 10% due to lockdowns; digital sales surge 58%

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Michael Hill digital sales jumped 58 per cent in the first quarter while many of its stores were closed due to lockdowns.

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Michael Hill digital sales jumped 58 per cent in the first quarter while many of its stores were closed due to lockdowns.

Jeweller Michael Hill International says sales fell 10 per cent in the first quarter as many of its stores in Australia and New Zealand were closed due to lockdowns.

Sales fell to A$107.6 million (NZ$114m) in the 13 weeks to September 26, from A$119.5m last year, the Brisbane-based company said in a statement to the NZX. It lost 7,396 store trading days in the quarter, compared with 2,158 days in the same quarter last year, representing a net loss of 20 per cent.

Excluding the impact of store closures, sales were up 16 per cent. Digital sales surged 58 per cent to make up 9.4 per cent of total sales, compared with 5.3 per cent of sales last year and the company’s profit margins lifted by between 100 and 200 basis points.

Like many retailers, Michael Hill has benefited from buoyant consumer spending during the Covid pandemic, making an extra A$42.2m in profit last year, and ending the year with no debt and surplus cash of A$72.4m.

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Chief executive Daniel Bracken warned in August that lockdowns were denting profit for the current financial year but he said on Tuesday that higher margins, cost control, digital growth and strong sales at stores which remained open had lessened the negative impact on earnings from the lockdowns.

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In New Zealand, first quarter sales fell 13 per cent to $22.1m as five weeks of lockdown resulted in the loss of 1333 trading days. At the end of the quarter, 16 Auckland stores remained closed, out of a total 49 New Zealand stores. Excluding the impact of store closures, same-store sales rose 18 per cent.

Michael Hill has received $739,000 in Government wage subsidy payments for 322 employees related to the latest lockdown, according to Work and Income records.

In Australia, first quarter sales fell 25 per cent to A$48.8m as 71 of the company’s 150 stores were closed for most of the period. Same-store sales rose 9.4 per cent.

In Canada, first-quarter sales rose 19 per cent to C$35m (NZ$41m). By early July, all 86 stores were open and trading, with only 132 store trading days lost during the quarter, the company said.

“Upon re-opening, our Canadian business has been flying, delivering impressive sales and margin growth every week,” Bracken said. “This demonstrates that as territories re-open, the business is ready to meet the strong consumer demand.”

Bracken said he was looking forward to the progressive opening of the company’s Australian and Auckland stores ahead of the “all-important” Christmas trading period.

Shares in Michael Hill rose 4.2 per cent to a three-year high of 99 cents shortly after the NZX opened for trading at 10am.