Michael Hill Faces Margin Pressure and Brand Impairment as CEO Passes Away
Michael Hill International reported a steady FY25 with revenue holding firm at $643.7 million and a return to profitability despite ongoing retail challenges. The year saw strategic store closures, digital sales growth, and leadership changes, setting the stage for a reset under new CEO Jonathan Waecker.
- FY25 revenue broadly flat at $643.7 million
- Comparable EBIT slightly down to $15.3 million
- Statutory net profit after tax improved to $2.1 million
- No dividends declared for FY25 amid cautious capital management
- CEO Daniel Bracken passed away; Jonathan Waecker appointed as new CEO
Steady Revenue Amid Challenging Conditions
Michael Hill International Limited closed its 2025 financial year with revenue largely unchanged at $643.7 million, a modest dip of 0.2% from the prior year. This stability comes despite persistent global economic uncertainty, record-high gold prices, and a highly promotional retail environment that pressured margins and consumer spending.
Comparable earnings before interest and tax (EBIT) edged down slightly to $15.3 million from $15.9 million in FY24, reflecting the ongoing cost pressures and strategic investments made during the year. Notably, statutory net profit after tax swung back into positive territory at $2.1 million, reversing a loss of $0.5 million the previous year. This improvement was influenced by a $3 million favorable litigation outcome but offset by a $7.4 million non-cash impairment of the Bevilles brand intangible asset.
Operational Shifts and Store Network Rationalisation
The Group undertook a significant rationalisation of its store footprint, closing 14 stores while opening only two, ending the year with 287 stores across Australia, Canada, and New Zealand. This included converting two Australian Michael Hill stores to the Bevilles brand and pausing further Bevilles expansion to focus on optimizing the business model amid challenging trading conditions, especially in Victoria.
Digital sales grew 6% to surpass $50 million for the first time, underscoring the Group’s continued commitment to omni-channel retailing. The commissioning of a new distribution centre in Auckland aims to enhance supply chain efficiency and customer service, supporting both physical and online channels.
Leadership Transition and Strategic Reset
The year was marked by the tragic passing of CEO Daniel Bracken in February 2025. Andrew Lowe stepped in as Interim CEO, guiding the company through a turbulent period until the appointment of Jonathan Waecker as the new CEO in August 2025. Waecker brings extensive global retail and digital transformation experience, signaling a strategic reset focused on brand repositioning, margin recovery, and sustainable growth.
Cost control remained a priority, with management implementing measures to reduce operating expenses, including corporate overheads and discretionary spending. The Group also established an AI Centre of Excellence to explore technology-driven efficiencies and innovation.
Capital Management and Dividend Policy
Reflecting the cautious outlook, Michael Hill International declared no interim or final dividends for FY25, continuing a conservative capital management approach amid compressed earnings. Net debt closed at $41.9 million, slightly higher than the prior year, with an increased debt facility to support seasonal working capital needs.
The Board’s decision to withhold dividends aligns with the focus on investing prudently in operational improvements and preparing the business for an eventual economic recovery.
Risk and Compliance Focus
The Group highlighted ongoing risks including retail theft, cyber security threats, and regulatory compliance challenges across its operating markets. Executive-led taskforces and technology governance committees have been established to mitigate these risks, emphasizing the safety of staff and customers and strengthening cyber resilience.
Michael Hill International also acknowledged the upcoming mandatory climate-related disclosure requirements, with voluntary sustainability reporting already in place.
Bottom Line?
As Michael Hill navigates leadership change and market headwinds, investors will watch closely for signs of margin recovery and strategic execution under new management.
Questions in the middle?
- How will new CEO Jonathan Waecker reshape Michael Hill’s growth strategy?
- What impact will the Bevilles brand impairment have on future profitability and expansion plans?
- Can digital sales momentum offset pressures from store closures and challenging retail conditions?