Michael Hill International has returned to profit growth and restored its dividend after a year of sharper execution, brand simplification and stronger cash generation. Record revenue and a 57% rise in comparable EBIT mark a meaningful recovery, although the reset remains unfinished.
- Record group revenue of $655.7 million
- Comparable EBIT increased 57% to $24.0 million
- Net debt reduced by $36.3 million to $5.5 million
- Final dividend restored at 2.0 cents per share
- Claudia Batten to succeed Rob Fyfe as chair
Turnaround Delivers Revenue and Profit Recovery
Michael Hill International Limited (ASX/NZX:MHJ) has restored its dividend after a year in which revenue reached a record $655.7 million, comparable EBIT rose 57% to $24.0 million and statutory net profit after tax increased 376% to $10.0 million. The jewellery retailer’s net debt fell from $41.9 million to $5.5 million, giving the FY26 result a stronger cash and balance-sheet profile than the headline sales growth alone suggests.
Group revenue increased 1.9% in reported currency, or 4.1% on a constant-currency basis, while same-store sales rose 3.0%, or 5.2% on a constant-currency basis. Every market grew on the company’s constant-currency measure: Canada led with same-store sales up 7.0%, Australia rose 4.8% and New Zealand increased 3.6%. Comparable EBIT is an unaudited non-IFRS measure, so the 57% improvement should be read alongside statutory EBIT of $31.1 million and the $10.0 million statutory NPAT result.
Canada Leads as Bevilles Reset Gains Traction
Canada remains the clearest growth engine in the portfolio. Revenue increased 7.3% in local currency to CA$174.2 million, with comparable EBIT rising to CA$21.9 million from CA$18.9 million. Online sales in Canada grew 22%, while the group said bridal sales outpaced other categories and supported the acquisition of higher-value customers. The company opened a flagship store at Pacific Centre in Vancouver during the year, even as the Canadian network contracted by one store overall to 81.
Australia produced the largest contribution, with revenue up 2.5% to $371.8 million and comparable EBIT up to $36.3 million from $27.0 million. The more revealing detail sits inside the Bevilles reset: after a 4.6% same-store sales decline in the first half, the brand delivered 5.8% growth in the second half, while its gross margin increased by 660 basis points between the two periods. Management cautions that the reset is still early, but the half-year reversal provides the first tangible evidence that the value-focused brand may be stabilising.
Two-Brand Strategy Frees Cash and Management Attention
Michael Hill spent FY26 narrowing the business to the Michael Hill and Bevilles brands, with closures of Medley and TenSevenSeven contributing to $6.1 million of non-cash strategic review and simplification write-offs. The store network fell by six to 281 locations, while inventory declined 4.7% to $189.7 million. Management said inventory productivity, measured by gross margin return on investment, improved 13%, suggesting the reduction was linked to clearance and allocation discipline rather than simply a smaller footprint.
Gross margin held at 60.5% despite record highs in gold prices, while cost of doing business declined by 70 basis points to 57.1% of revenue. Online sales represented 8.7% of group revenue and grew 10% for the Michael Hill brand on a constant-currency basis. The company is also using Impact Analytics for demand forecasting and inventory planning, while its in-house Retail Assist tool handled more than half of retail support enquiries during the year.
Dividend Returns as Leadership Transition Approaches
The board declared a final dividend of AU2.0 cents per share, 50% franked for Australian purposes and carrying partial New Zealand imputation credits. No interim dividend was declared, making the final payment a cautious restoration rather than a return to the payout levels seen before the recent downturn. The group’s debt facility was refinanced in December for a further two years to 31 August 2028, with ANZ and Commonwealth Bank of Australia funding a $90 million core working-capital facility.
The leadership reset will continue at board level. Rob Fyfe will retire as director and chair on 28 November 2026, with Claudia Batten appointed to succeed him. The report also records the appointments of Karen Bozic and Mark Bayliss as directors, while Jonathan Waecker’s new executive team includes CFO Elodie Guillaumond and Chief Product Officer Tonia Zehrer. For FY27, the key test is whether the improved second-half trading, particularly at Bevilles and in New Zealand, can become repeatable without sacrificing the margin and working-capital gains that underpinned the dividend’s return.
Bottom Line?
FY26 shows a more disciplined Michael Hill with materially lower debt, but the next test is converting a promising reset into durable earnings growth across both core brands.
Questions in the middle?
- Can Bevilles sustain its second-half sales and margin recovery through FY27?
- Will Canada’s online and bridal momentum offset the reduced physical store footprint?
- Can Michael Hill maintain a 60.5% gross margin as gold prices, lab-grown diamonds and consumer spending patterns evolve?