Michael Hill International reported steady FY25 results with flat revenue and modest profit improvement amid challenging market conditions. The company is focusing on brand repositioning, operational efficiency, and AI innovation as it navigates a complex retail environment.
- Group revenue steady at $643.7 million, comparable EBIT slightly down to $15.3 million
- Statutory net profit improves to $2.1 million, aided by non-cash impairment and litigation gains
- Same store sales growth in Canada (+4.4%) and Australia (+1.2%), decline in New Zealand (-5.5%)
- Digital sales surpass $50 million, growing 6% year-on-year
- 14 stores closed, 2 opened; no final dividend declared for FY25
Steady Financial Performance Amid Market Challenges
Michael Hill International Limited closed its 2025 financial year with revenue virtually unchanged at $643.7 million, reflecting a retail environment marked by volatility in gold prices and ongoing promotional pressures. Comparable earnings before interest and tax (EBIT) edged slightly lower to $15.3 million from $15.9 million the previous year, while statutory net profit after tax improved to $2.1 million, benefiting from a $7.4 million impairment of the Bevilles brand intangible asset partially offset by a $3 million favourable litigation outcome.
Mixed Regional Sales Trends and Store Network Adjustments
On a same store sales basis, Canada delivered a robust performance with 4.4% growth, supported by a 6.5% increase in the second half. Australia posted a modest 1.2% increase, improving to 2.0% in the latter half, while New Zealand faced a 5.5% decline, though the rate of decline eased in the second half. The company rationalised its physical footprint by closing 14 stores globally, predominantly in Australia and Canada, while opening two new stores and converting two Australian Michael Hill stores to the Bevilles brand, ending the year with 287 stores.
Digital Growth and Operational Enhancements
Digital sales continued their upward trajectory, growing 6% to exceed $50 million for the first time, underscoring the company’s strategic focus on omni-channel retailing. The launch of the MH Pendant Bar concept and an elevated sustainable diamond offering contributed to maintaining gross margins at 60.5%, despite record gold prices. Operationally, the commissioning of a new distribution centre in Auckland aims to enhance supply chain efficiency and customer service across markets.
Strategic Reset and Leadership Transition
The year was marked by significant leadership changes and challenges, including the tragic loss of CEO Daniel Bracken and the passing of founder Sir Michael Hill. Chair Rob Fyfe acknowledged the resilience of the team and highlighted ongoing strategic priorities – repositioning the Michael Hill brand, reviewing the New Zealand market, and reinforcing the Bevilles brand fundamentals. The appointment of new CEO Jonathan Waecker signals a forthcoming strategic reset, with initiatives such as an AI Centre of Excellence and a consignment stock trial aimed at driving margin recovery and sustainable growth.
Outlook and Early FY26 Trading
Early trading in FY26 shows encouraging momentum, with group same store sales up 3.2% in the first seven weeks, led by strong performances in Canada (+6.8%) and Australia (+3.4%), despite a 3.2% decline in New Zealand. The company remains cautious, maintaining no final dividend for FY25 and focusing on prudent capital management amid ongoing economic uncertainty.
Bottom Line?
Michael Hill’s FY25 results reflect resilience and a strategic pivot, but the path to sustained growth hinges on execution amid evolving market dynamics.
Questions in the middle?
- How will the new CEO’s strategic reset impact Michael Hill’s growth trajectory and brand positioning?
- Can digital sales momentum offset challenges in physical retail, especially in New Zealand?
- What are the prospects and risks of the new consignment stock model and AI initiatives for operational efficiency?