Michael Hill Eyes Margin Gains After Flat FY25 Amid Market Challenges

FY25 Performance Amid Global Uncertainty

Michael Hill International Limited closed FY25 with largely flat financial results, reflecting the persistent headwinds in global economic conditions and retail trading environments. The company reported group revenue of $644 million, nearly unchanged from the prior year, and a comparable EBIT of $15.3 million, slightly down from FY24. Notably, the New Zealand market continued to face challenges, while Australia and Canada segments managed to deliver revenue growth, underscoring regional disparities in consumer demand.

Inventory management remained a focus, with year-end holdings stable at $199 million despite record-high gold prices throughout the year. Net debt was maintained at $42 million, consistent with the previous year, reflecting disciplined capital management amid uncertain conditions.

Strategic Initiatives and Brand Repositioning

The company made significant strides in repositioning its brand and enhancing customer experience. Key initiatives included opening a second global flagship store on Melbourne’s Bourke Street and refurbishing the Queenstown store in New Zealand with a refreshed brand identity. The launch of the Pendant Bar concept, emphasizing customizable and ready-to-wear gifting options, along with an elevated sustainable diamond offering under the “LAB.” label, highlighted Michael Hill’s commitment to innovation and sustainability.

Additionally, the establishment of a New Zealand Distribution Centre aims to streamline logistics and support future growth. The company also focused on reinforcing retail fundamentals and increasing awareness of its Bevilles brand, particularly in Australia.

Early FY26 Trading Signals Mixed Momentum

Preliminary trading data for the first 16 weeks of FY26 shows a promising 100 basis point improvement in group gross margin year-on-year, driven by product and brand initiatives. Same store sales were flat overall, with Australia and Canada posting modest gains of 0.7% and 4.1% respectively, while New Zealand sales declined by 6.2%. Total group sales fell 1.3%, influenced partly by a 4.4% reduction in store numbers from 297 to 284.

Looking ahead to the critical Christmas trading period, Michael Hill is preparing with new and refurbished flagship stores in key locations such as Adelaide’s Rundle Mall, Sydney’s Bondi Junction, and Toronto’s Yorkdale. The company is also expanding its product range with new collections and broadening its gifting options to meet diverse customer needs.

Governance and Shareholder Confidence

The AGM saw strong shareholder endorsement for the adoption of the remuneration report and the re-election of directors Gary Smith, Andrea Slingsby, and Robert Fyfe. This continuity in leadership provides stability as the company navigates its strategic priorities and market challenges.

While the company remains cautious about ongoing economic uncertainties and competitive pressures, its focus on margin improvement, brand repositioning, and operational efficiency positions it to capitalize on opportunities in its core markets.