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 $47.9m.

• Strategic milestones included a brand refresh, opening a global flagship store, launching the Michael Hill Foundation, expanding the Bevilles network, and introducing new brands like TenSevenSeven and Medley.

• Inventory was actively managed, reducing holdings by $7m to $195.8m at year-end.

• No final dividend declared for FY24; total dividend for the year was AU1.75 cents per share.

Financial highlights

• Group revenue (including Bevilles) up 4.2% to $644.9m on a 52-week basis; gross margin declined to 60.6%.

• Comparable EBIT was $15.9m, down 73% year-over-year, impacted by inflationary pressures.

• Average transaction value increased by 6% year-over-year.

• Inventory reduced by $7m to $195.8m at year-end.

• Net debt at year-end was $38.7m; debt facility increased by $40m for seasonal needs.

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 $15m, with a focus on digital, IT, and selective store investments.

• 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.

• Focus remains on sales and margin growth, network expansion, and productivity improvements.

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