Michael Hill International (MHJ) H2 2024 earnings summary

Executive summary

• FY24 was challenging, cycling record FY23 results, but the group outperformed the broader jewelry market and gained market share.

• Margin pressure from higher input costs and promotional activity impacted EBIT, but digital sales grew 16% to AUD 48 million and returned to growth.

• Significant progress on multi-brand strategy, including a brand refresh, opening a global flagship store, launching the Michael Hill Foundation, and expanding Bevilles and new concepts like TenSevenSeven and Medley.

Financial highlights

• Group revenue (including Bevilles) up 4% to AUD 645 million on a 52-week basis; statutory revenue up 2%.

• Comparable EBIT dropped 73% to AUD 15.9 million, driven by lower gross margins and inflationary cost pressures.

• Gross margin declined 360bps to 60.6% due to higher input costs and increased competitor activity.

• Inventory reduced by AUD 7 million to AUD 196 million at year-end.

• Total dividend for the year was AUD 0.0175 per share, down from AUD 0.075.

Outlook and guidance

• Group aims to recover gross margin to around 62% in FY25, targeting a 150-200 basis point improvement.

• CapEx for FY25 expected to halve to around AUD 15 million, focusing on digital, IT, and selective store investments.

• No final dividend declared for FY24; capital preserved for future growth.

• Positive trading momentum in early FY25, with group same-store sales up 2.7% and total sales up 3.2% for the first eight weeks.

• New Zealand expected to recover as consumer confidence improves with further rate cuts.