Closure of Emma & Roe and US stores hits Michael Hill results
Written on the 27 August 2018 by David Simmons
The closure of Michael Hill's (ASX: MHJ) United States arm in addition to its fledgling Emma & Roe brand materially impacted the jewellery retailer's FY18 results.
The jeweller's statutory net profit fell 85.9 per cent to hit $4.6 million.
Despite the setback, CEO Phil Taylor says the company is in a better position going into FY19.
"The period was one of recalibration and repositioning for the group, which included the exit of the US and Emma & Roe business," says Taylor.
"While the cost of exiting these businesses had a material one-off impact on the financial result, Michael Hill is a stronger and more resilient business today with a clear strategy for long-term growth."
Overall, revenue in FY18 increased by 4.4 per cent to $575.5 million and sale store sales from continuing operations increased by 0.4 per cent to $526 million.
The group's Australian segment, under the Michael Hill brand, increased revenues by 1.2 per cent to $325.7 million, with Australian retail conditions hitting the brand and resulting in a decline in earnings of 0.9 per cent.
While the group's US play hasn't paid off, in Canada, earnings were up 17.9 per cent to a record CA$14.6 million and revenue increased by16 per cent to CA$130.8 million.
Taylor says the group's strategy to reposition Michael Hill as an omni-channel brand is continuing well.
"The company also made significant progress on its strategy to reposition Michael Hill from a traditional retailer to a differentiated omni-channel brand," says Taylor.
"This approach is planned to differentiate the Michael Hill brand, products and experiences to create a true point of difference and to provide a platform that is designed to support growth across new channels and markets."
The group made a significant investment in online sales of $10.3 million during the period, with online sales now accounting for 1.8 per cent of the company's business.
Additional investment in online is planned for FY19.
The company will maintain its total dividend for the year at $0.05 per share in line with FY17.
Shares in Michael Hill are down 3.5 per cent to $0.97 per share at 10.51am AEST.
Business News Australia
Author: David Simmons