The All Ordinaries Index (ASX: XAO) could get an added boost over the year ahead from an ASX All Ords retail stock that Macquarie Group Ltd (ASX: MQG) expects could more than double in value.
The promising stock in question is Aussie retail jewellery chain Michael Hill International Ltd (ASX: MHJ).
In early afternoon trade today, Michael Hill shares are down 4.0%, changing hands for 36 cents apiece.
That puts shares in the ASX retailer down a sharp 34.6% year to date, which could represent an opportune buying opportunity for FY 2026.
Here's why.
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ASX All Ords retail stock tipped for big turnaround
Michael Hill reported its full-year financial results (FY 2025) yesterday, 25 August.
Macquarie noted that those results were "directly in line with recent trading update", though the ASX All Ords retail stock closed down 5.1% on Monday.
Among the highlights, Michael Hill reported FY 2025 revenue of $643.7 million, broadly flat compared to FY 2024.
The gross margin came in at 60.5%, down 0.1% year over year. Management noted that the impact of record gold prices and ongoing heightened promotions were largely offset by the introduction of new higher margin products.
Pleasingly, the ASX All Ords retail stock returned to profit, reporting a statutory net profit after tax (NPAT) of $2.1 million, up from the $500,000 loss posted in FY 2024.
In a promising trend, the second half of the financial year saw an improving same-store sales trend across all the company's segments.
Pointing to that uptick, Macquarie said, "2H25 improvement, evidence of improving trading conditions and margin expanding merchandising strategies, supports our outperform rating."
According to the broker:
While trading conditions remained challenging, Group revenue growth was positive in 2H (except NZ), and MHJ successfully offset the impacts of continued aggressive promotional trading conditions and record high gold prices with the introduction and mix of higher margin products. This supported a GP margin of ~60.5% for the year, broadly in line with the prior year (60.6%).
In another promising trend, the ASX All Ords retail stock is having a strong start to the new financial year. For the first seven weeks of FY 2026, Michael Hill said group sales were up 3.0%, and group same-store sales were up 3.2% compared to the same period last year.
Commenting on the strong start to FY 2026, Macquarie said:
The early FY26 trading update suggests that the momentum from 2H25 has accelerated, and with further rate cuts forecast for NZ and Australia, we see scope for that momentum to build further. As the largest profit geography, a recovery in Australia has the potential to significantly lift Group EBIT.
Time to buy?
Connecting the dots, the broker concluded:
While MHJ faces near-term operating headwinds, the magnitude of the prevailing discount to assessed fair value, the expected recovery in GP margins and identified multi-channel growth initiatives combine to support our outperform rating.
Macquarie has a 12-month price target of 75 cents per share on the ASX All Ords retail stock. That's more than 108% above current levels.
