Michael Hill Holds Steady in FY25 with Flat EBIT and Sales Despite Store Closures
Michael Hill International reports flat full-year earnings and sales for FY25, with a second-half sales uptick and strategic store closures shaping its outlook.
- FY25 comparable EBIT expected between $14m and $16m, near FY24 levels
- Group sales flat year-on-year, with 2.4% same store sales growth in H2
- Gross margin stable at approximately 60.5%, despite promotional pressures
- 14 Michael Hill stores closed, total store count reduced from 300 to 287
- Strong Canadian segment performance and new product lines boost momentum
Steady Earnings Amid Challenging Conditions
Michael Hill International Limited has delivered a FY25 trading update that signals resilience in a tough retail environment. The jewellery retailer anticipates comparable earnings before interest and tax (EBIT) of between $14 million and $16 million, closely mirroring the $15.9 million recorded in FY24. This flat earnings performance comes despite ongoing aggressive promotional activity and record-high gold prices that have pressured margins across the sector.
Sales and Margin Dynamics
Group total sales and same store sales remained flat over the full year, with a notable improvement in the second half. Same store sales rose 2.4% in H2, driven by strong performances across all segments, particularly in Canada where record sales were achieved. Gross margin held steady at around 60.5%, nearly unchanged from the previous year, as the company balanced promotional discounts with the introduction of higher-margin products such as the new “Pendant Bar” range and expanded “LAB.” collection.
Strategic Store Portfolio Adjustments
Reflecting a focus on productivity and strategic alignment, Michael Hill permanently closed 14 stores during the year, 10 in Australia and 4 in Canada, while also converting two Australian Michael Hill stores into Bevilles outlets. The total store count declined from 300 to 287, with 250 Michael Hill brand stores remaining across Australia, Canada, and New Zealand. These moves aim to optimize the retail footprint amid shifting consumer patterns and operational priorities.
Capital and Inventory Management
The company maintained disciplined capital management, delivering targeted cost reductions in the second half and managing inventory levels tightly, closing the year with approximately $199 million in inventory. Net debt rose slightly to $42 million from $39 million in FY24, reflecting ongoing investments aligned with strategic priorities.
Looking Ahead to Christmas Trading
Interim CEO Andrew Lowe acknowledged the challenges faced but expressed confidence in the team’s agility and the positive momentum built in the latter half of the year. The company is focused on executing margin recovery initiatives as it approaches the critical Christmas trading period, aiming to convert recent sales gains into improved profitability.
Bottom Line?
Michael Hill’s steady FY25 performance sets the stage for a critical Christmas season where margin recovery will be key.
Questions in the middle?
- How effective will margin recovery initiatives be during the upcoming holiday season?
- What impact will the reduced store footprint have on long-term growth and brand presence?
- Can the Canadian segment’s strong momentum be sustained amid global economic uncertainties?
