Michael Hill International Limited Analysis

Overview

The Michael Hill story began in 1979 when Sir Michael and his wife Christine opened their first store in the New Zealand town of Whangarei, some 160 kilometres north of Auckland. Since then, the company growth has been guided by a unique retail jewellery formula. Through dramatically different store designs, a product range devoted exclusively to jewellery and development of high impact advertising, Michael Hill Jewellers rose to national prominence. In 1987 Michael Hill International was listed on the New Zealand Stock Exchange, the same year the Group expanded into Australia.

In 2002, Michael Hill expanded into North America, opening its first stores in Vancouver, Canada. The Canadian presence now includes stores in British Columbia, Alberta, Manitoba, Saskatchewan and Ontario.

The first Michael Hill stores opened in the United States in September 2008. There are now stores in Illinois, Ohio, Minnesota and New York.

Exclusive jewellery collections available at Michael Hill stores include Michael Hill Designer Bridal, Infinitas, Everlight and Spirits Bay (New Zealand only).

As at June 2016, there are 168 stores across Australia, 52 in New Zealand, 67 in Canada and 10 in the United States. There are also four Michael Hill online stores servicing each market.

In June 2016, Michael Hill under took a Scheme of Arrangement with a plan to become a dual-listed company. Michael Hill relisted on the New Zealand Stock Exchange and listed as a primary listing on the Australian stock exchange effective 7 July 2016.

Performance

The following information was extracted from Michael Hill International Limited's full year results, released 25 August 2025:

Key Financial Results

Group revenue was $643.7m (FY24: $644.9m), broadly flat against last year.

• Group gross margin settled at 60.5% (FY24: 60.6%), with the impact of record gold prices and a continued heightened promotional environment, largely offset by introducing new higher margin product.

• Comparable earnings before interest and tax (EBIT) of $15.3m (FY24: $15.9m).

• Statutory net profit after tax improved, to $2.1m (FY24: $0.5m loss). This result includes the net after tax impact of two non-cash items – a $7.4m impairment expense of the Bevilles Brand intangible asset, partially offset by a $3.0m favourable litigation outcome.

• Inventory levels were managed to absorb record gold prices, closing at $199.1m (FY24: $195.8m).

• Closing net debt position of $41.9m (FY24: $38.7m).

• No final dividend declared for FY25 (FY24: nil).

Operational Performance

• On a same stores sales basis (in local currency), Canada delivered another record year of sales performance with +4.4% growth, Australia was up +1.2%, while New Zealand was down -5.5%. In the second half, we saw an improving same store sales trend across all segments (CA: +6.5%, AU: +2.0%, NZ: -2.4%).

• Digital sales grew 6% to deliver over $50m for the first time (FY25: $50.9m, FY24: $47.9m).

• Gross margin supported by the successful launch of the MH Pendant Bar concept, with a focus on both build-your own and ready-to-wear gifting and an elevated sustainable “LAB.” diamond product offering.

• Established a new Distribution Centre in Auckland, New Zealand, to improve customer service levels and operational efficiencies, with successful commissioning in early FY26.

• For Michael Hill, two stores were opened (CA: 1, NZ: 1), 14 stores were closed (AU: 10, CA: 4), and two AU stores were converted to Bevilles. For Bevilles, in addition to the two converted MH stores, one store closed, taking the network to 37. The Group finished the year with 287 stores (FY24: 300).

FY25 – Group Business Performance Global economic uncertainty and challenging retail trading conditions persisted across all markets, with full year sales, gross margin and earnings broadly in line with prior year. The Group reported comparable earnings before interest and tax of $15.3m for the year ended 29 June 2025 (FY24: $15.9m).

The Group delivered revenue of $643.7m (FY24: $644.9), broadly flat on prior year. The second half saw an improvement in same store sales across all segments, with FY25H2 same store sales up +2.4%. In addition, the business saw productivity lift with sales per hour increasing by 5% for the year, as the business maintained its focus on wage control.

The impacts of continued aggressive promotional trading conditions and record high gold prices were largely offset by the introduction and mix of higher margin product. Accordingly, gross margin of 60.5% was broadly flat to last year (FY24: 60.6%).

Inflationary cost pressures continued to impact operating expenses across the business, particularly store labour and occupancy costs. During the second half, management took decisive action to reduce operating costs, discretionary spend, corporate roles and overheads, which enabled full year earnings to close broadly flat to prior year.