Michael Hill International reported a 3% rise in group sales and a 28.6% jump in comparable EBIT for the half-year ended December 2025, driven by strong performances across Australia, Canada, and New Zealand. Despite improved earnings and cash flow, the board has opted to withhold an interim dividend, signalling cautious optimism.
- Group sales increased 3.0% to $371 million
- Comparable EBIT surged 28.6% to $31 million
- Same store sales grew 3.8%, led by Canada and Australia
- Inventory reduced by $11.3 million, net cash position improved by $30.5 million
- No interim dividend declared; board plans to resume dividends at full year
Solid Sales Growth Across Key Markets
Michael Hill International Limited has delivered a robust half-year performance for the 26 weeks ending 28 December 2025, with group sales rising 3.0% to $371 million. This growth was underpinned by strong same store sales increases of 6.1% in Canada, 4.8% in Australia, and a return to positive growth of 1.8% in New Zealand, reversing previous declines. The company’s diversified geographic footprint continues to provide resilience amid varying economic conditions.
Earnings Surge Despite Input Cost Pressures
Comparable earnings before interest and tax (EBIT) jumped 28.6% to $31 million, reflecting higher sales volumes and disciplined cost management. Gross margin held steady at 61.2%, despite record-high gold and silver prices, thanks to a favourable product mix and targeted pricing strategies. Operating expenses were carefully controlled in an inflationary environment, enhancing operating leverage and driving improved profitability.
Operational Initiatives and Inventory Management
The half saw continued investment in customer experience, including the opening of three flagship stores featuring the new brand design in Adelaide, Sydney, and Toronto, alongside the launch of a new Auckland Distribution Centre to boost fulfilment efficiency. Inventory levels were reduced by $11.3 million to $201.9 million, reflecting improved stock efficiency and renegotiated supplier terms, which contributed to a healthier working capital position.
Balance Sheet Strength and Capital Management
Michael Hill refinanced its debt facility in December 2025, extending maturity to August 2028 with improved margins and adding Commonwealth Bank of Australia as a new lender alongside ANZ. The group ended the half with a net cash position of $20.7 million, a $30.5 million improvement from the prior year’s net debt. Despite this strengthened financial position, the board elected not to declare an interim dividend, signalling a cautious approach amid ongoing market uncertainties.
Looking Ahead
The board intends to resume dividends at the full year, contingent on continued positive trading conditions. Product innovation remains a focus, with new collections such as Vermeil, Lume LAB, and expanded curated gift sets supporting brand freshness and customer engagement. The company’s strategic emphasis on operational efficiency, customer experience, and capital discipline positions it well for the remainder of the financial year.
Bottom Line?
Michael Hill’s strong half-year performance and improved balance sheet set the stage for a potential dividend return, but cautious market conditions warrant close watch.
Questions in the middle?
- Will Michael Hill sustain its margin amid ongoing precious metal price volatility?
- How will the company’s store network strategy evolve given recent net closures?
- What impact will the new Auckland Distribution Centre have on customer satisfaction and costs?