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A staggered reopening of stores in May was unable to help Michael Hill (ASX: MHJ) claw back an $81 million decline in sales due to closures in response to COVID-19.
The $52 million revenue figure for the fourth quarter represents a 61 per cent decline year-on-year, following on from an 11.9 per cent drop in the third quarter when restrictions began.
On a more positive note, for adjusted same stores the decrease was only 4.1 per cent, while sales through digital channels increased 193 per cent in the period.
The percentage of sales through digital channels also rose from 2.8 per cent to 4.6 per cent for the year, translating to about $22 million.
Despite axing 11 of its underperforming locations during the recovery period, the jewellery retailer remains confident in its position.
At the end of the quarter there were 155 stores trading in Australia, 49 in New Zealand and 70 in Canada.
The company aimed to preserve cash by pausing its discretionary spending, delivering a leaner support office and accessing government wage subsidies.
Michael Hill also stood down all team members from late March, with a view to gradually bring them back as stores reopened.
According to CEO Daniel Bracken, this "decisive action" helped the company survive.
"Michael Hill has emerged from the pause in store trading as a leaner, stronger and more focused business," he says.
"The reopening of our store network has seen very pleasing sales and margin performance despite lower foot traffic.
"We have continued to evaluate and assess our business, the learnings from which have been reinforced by some aspects of the global pandemic. This has allowed us the opportunity to reimagine and modernise our operating model to become a more relevant omni-channel retailer of the future."
Bracken expects that all of Michael Hill's international and domestic markets will remain unstable for some time.
However, he is optimistic in the company's ability to move forward with a fresh operating model which focuses more on online and loyalty markets.
"There is no doubt that economic uncertainty will continue, given future government stimulus packages in all markets remain unclear, and ongoing volatility in consumer confidence is likely," he says.
"As recent circumstances in Victoria have demonstrated, further COVID-19 outbreaks pose additional risks.
"With these risks in mind, Michael Hill has moved swiftly in addressing our operating model and associated cost base."
At the time of writing (12:31pm AEST), MHJ shares are up 4.9 per cent and trading at $0.32.
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