Shares in Michael Hill International Ltd (ASX: MHJ) have surged after the company said it expected first-half earnings to be 12% to 24% higher than for the same period the previous year.
In a statement released to the ASX on Tuesday, the jewellery retailer said first-half sales were $370.3 million, up 3.1% on the previous corresponding period and 3.8% higher on a same-store basis.
Stronger across the board
The company's Canadian division delivered record sales, with 6.1% growth, while Australian sales were up 4.8% and New Zealand reversed previous declines, growing 1.8%.
The company's gross margin was expected to be "broadly flat" on the previous corresponding period at 61.3%, while inventories were expected to be about $11 million lower, "as part of a deliberate plan to improve working capital efficiency".
The company finished the half with a positive net cash position of about $10 million, which was an improvement of $30 million over the first half of the previous year.
As the company said, there was also movement on the number of stores:
The half saw the successful opening of three Michael Hill flagship stores, Rundle Mall, Adelaide (refurbishment), Bondi Junction, Sydney (new store) and Yorkdale, Toronto (refurbishment), with all stores incorporating our new brand design and a modernised in-store customer experience. For Michael Hill, three stores were closed (AU: 1, NZ: 2) and one new AU store was opened, taking the network to 248 (AU: 123, NZ: 43, CA: 82).
The number of Bevilles stores operated by the company was steady at 37, meaning the total number of stores operated was 285, compared with 294 for the same period the previous year.
Michael Hill Chief Executive Officer, Jonathan Waecker, said it was a good result.
Under new leadership, the group delivered profitable quarter-on-quarter growth, driven by significant performance improvements in the final 10 weeks of the half, resulting in a materially improved trading trajectory relative to the early FY26 trading update presented at the October AGM. A sharper focus on execution, and the early impact of actions taken to stabilise and strengthen the business, delivered a markedly improved performance through the half. During the critical Christmas trading period, a strong focus on driving customer demand, combined with more disciplined product planning, store operations, and targeted promotional activity, delivered profitable net sales growth while maintaining margin. This translated into a meaningful uplift in EBIT year on year, alongside disciplined working capital management, including a significant reduction in inventory, resulting in the group returning to a positive net cash position at the half.
Mr Waecker added that management had "confidence in our continued focus on delivering profitable sales growth and building momentum across all markets''.
Michael Hill shares were 12.2% higher at 41.5 cents in early trade. The company was valued at $142.4 million at the close of trade on Friday.
