The Michael Hill International Ltd (ASX: MHJ) share price will be one to watch on Wednesday.
This follows the release of the jewellery retailer's half year results this morning.
How did Michael Hill perform in the first half?
For the six months ended December 29, Michael Hill delivered a 4.4% increase in operating revenue over the prior corresponding period to NZ$329.5 million. This was driven by a 6.3% lift in group same store sales which was offset slightly by the closing of two underperforming stores.
Michael Hill's group gross margin came under pressure during the half due to foreign exchange headwinds and gold price impacts. The company's gross margin fell from 64.2% to 61.7%.
Positively, management was able to offset this and competitive market pressures by delivering a reduction in costs. This led to underlying earnings before interest and tax growing 6.9% to NZ$31.6 million in the first half.
And on the bottom line, the company reported a statutory net profit after tax increase of 19.6% to NZ$21.4 million.
This allowed the Michael Hill board to declare an unfranked interim dividend of 1.5 Australian cents per share.
Management commentary.
Michael Hill's CEO, Daniel Bracken, was pleased with the half, especially considering the challenging trading conditions.
He said: "We're pleased to deliver an increase in same store sales of 6.3%, and underlying EBIT growth of 6.9% in really challenging trading conditions. The result reflects the momentum we have built and is an early validation of both the strategy and the new management team. We remain convinced that the best way to insulate the business from external factors is a vigilant focus on retail fundamentals, alignment of retail execution, product newness and an unwavering focus on CODB."
Outlook.
Mr Bracken advised that Michael Hill has not yet been impacted by the coronavirus outbreak.
Though he acknowledged that it is "not yet clear what the cumulative impact could be on consumer confidence and discretionary spend."
He concluded: "However, we believe we have put in place the right strategies and initiatives and it is more important than ever for us to focus on cost reduction, improving productivity across all retail segments, exploring omni‐channel growth and continually strengthening our brand proposition."
