Let's take a closer look at the report and what this might mean for the Michael Hill share price.
Michael Hill reports strong sales and growth
Earlier today Michael Hill released its financial results for the half-year ending 27 December 2020.
The company's results were highlighted by an 82.1% surge in first-half net profit after tax (NPAT). For the first-half, Michael Hill recorded an NPAT of $38.9 million, compared to $21.4 million in the prior corresponding period (pcp).
In addition, the jewellery chain reported a 66.9% increase in earnings before interest and tax (EBIT) of $58.9 million. For the first-half, Michael Hill also saw a 6.3% increase in group same-store sales of $312.1 million.
Despite the strong performance, the company was not immune to the COVID-19 pandemic. In its report, Michael Hill sighted that the company had lost 3,709 store trading days due to the pandemic.
As a result, the jewellery chain estimated lost sales of approximately $23 million. Michael Hill cited these store closures for the 2.9% decline in revenue for the first half of $319.9 million.
The company also boasted a strong balance sheet for the first half, with a cash position of $90.3 million. As a result, Michael Hill declared an interim dividend of 1.5 cents per share.
What is the outlook for Michael Hill and its share price?
Michael Hill is a global jewellery chain with 289 stores operating in Australia, New Zealand, and Canada.
For the remainder of FY21, the company remains focussed on maximising growth opportunities.
Michael Hill identified its digital business as a key focus. For the first half of FY21, the company reported a 102% increase in digital sales of $18.5 million. Overall, digital sales contributed nearly 6% to total sales compared to 2.8% in the prior corresponding period.
As a result, Michael Hill noted digital priorities for FY21 include traffic driving initiatives, new payment platforms, and conversion rate optimisation.
The company's highlighted that the business had entered the second-half with clear strategic initiatives. Michael Hill's management noted a strong start to the second-half, with same store sales up 11% for the first 8 weeks.
At the time of writing, the Michael Hill share price is poised to open slightly higher after closing yesterday's trading session at 70 cents.